Credit Unions (Savings and Loans Cooperatives) are a phenomenon of the people's economic movement practised in West Kalimantan. For more than three decades, credit unions have been able to educate and raise public awareness to build their collective economy. Thus, the best practice of economic democratization can be said to exist there. This study aimed to determine the impact of transformational leadership on employee performance with organizational culture, employee engagement, and quality of work life as mediating variables at the credit unions in West Kalimantan. This research employed a descriptive quantitative method with a causal approach. Data collection was administered using a questionnaire involving 376 respondents selected through the purposive sampling technique. In addition, researchers used Structural Equation Modeling (SEM) utilizing the AMOS 24 software. The present study results revealed that transformational leadership had a positive and significant impact on employee performance, organizational culture, employee engagement, and quality of work life. Furthermore, the organizational culture, employee engagement, and quality of work life had a positive and significant impact on employee performance. Accordingly, the organizational culture, employee engagement, and quality of work life played a significant mediating role between transformational leadership and employee performance.
Various levels of competition in all business fields began to emerge along with the advancement of information technology in the digital era or Industry 4.0. Savings and loans cooperatives (credit unions) are also experiencing quite intense competition, thus requiring policies and strategies to overcome it. Savings and loans cooperatives in question are the cooperatives whose activities are only in the form of a savings and loans business. Savings and loans business itself is the activities carried out to collect funds and distribute them through savings and loans business activities from and for the concerned members of the cooperative, the prospective members of the cooperative, as well as the other cooperatives and their members (Government Regulation No. 9 of 1995). In facing these challenges, companies must improve both from the inside and outside. The improvements within the company can be made by managing, improving capabilities and maintaining human resources, improving organizational systems and building a good organizational culture and climate so that the human resources in the company can work better and have high performance. Discussing employee performance means discussing their abilities in carrying out the assigned tasks which includes the output quantity and quality, the work attendance and the cooperative attitude [1].
Employee performance can be affected by several factors, including employee engagement. Employee engagement is a positive attitude possessed by employees toward the company they work for and the values within the company [2]. A high level of employee engagement influences a high level of morale, regulatory compliance, on-target work and a tendency to prioritize the organization over others which will ultimately impact the improvement of employee performance. Concerning company performance, the stronger the engagement between employees and the company, the higher the company's performance will be. Schaufeli et al. [3] stated that the concept of engagement can be associated with a wide variety of business consequences, such as more persistent efforts, faster performance, higher quality and decreased turnover intention. Companies should strive to develop a two-way relationship between them and their employees. Eventually, this business awareness can make employees give their best performance for the company's future progress. Thus, it can be said that employee engagement can affect employee performance. This circumstance was proven by research conducted by Awadh and Saad [3], Allameh et al. [5] and Dajani [6] which discovered that employee engagement had an impact on employee performance.
Another factor that can affect employee performance is the quality of work life. Quality of work life is an effective program in improving working conditions (employee's point of view) and greater organizational effectiveness (manager's point of view). It also has a role in monitoring employees regarding the quality of their work and their work life, thus providing managers with ideas for organizational improvements [7]. Furthermore, quality of work life is concerned with the level of satisfaction, motivation, engagement and personal commitment related to working life [8]. The quality of work life is determined by various factors, including psychosocial parameters, health and welfare conditions in the workplace and the adequacy of resources and infrastructures. Policies and regulations based on individual considerations of employees can significantly increase productivity due to the presence of subjective components, such as trust, commitment, satisfaction and control [9].
Organizational culture is another factor that is believed to affect employee performance. It is a set of assumptions or belief systems, values and norms developed within the organization. It serves as behavioural guidelines for organizational members in overcoming the issues of external adaptation and internal integration [10]. A properly implemented organizational culture can create a conducive environment so that employees' work can run smoothly, the morale is increased, a sense of comfort and security is guaranteed to work well and the working environment is kept clean. This situation can ultimately improve employee performance. It is in accordance with the study conducted by Awad and Saad [4], Paschal and Nizam [11] and Pawirosumarto et al. [12], which found that organizational culture had a significant impact on employee performance.
Transformational leadership is the next factor that can create good organizational culture, employee engagement and quality of work life to improve employee performance. A transformational leader inspires his/her followers to put aside personal interests for the good of the organization and he/she also has a tremendous influence on the followers. They pay attention to the self-development needs of their followers, alter awareness of existing issues by helping others perceive problems in a new way and please and inspire their followers to work hard to achieve common goals [13].
Leadership involves other people, the unequal power distribution between leaders and members, mobilizes abilities by using various forms of power to influence the members' behaviours and is concerned with values. Four common traits affecting organizational leadership success are intelligence, maturity, self-motivation and encouragement and human relations attitudes [14]. The appropriately applied transformational leadership in an organization or company can affect employees in terms of work motivation, work discipline, morale, job satisfaction and trust and compliance to become more eager to achieve organizational goals. It also has an impact on increasing employee engagement which ultimately improves employee performance, which is in line with research conducted by Evelyn and Hazel [15], Babatunde and Emem [16], Milhem et al. [17], Devi and Narayanamma [18], Bezuidenhout and Schult [19] and Sougui et al. [20], revealing that transformational leadership had a significant impact on employee engagement and employee performance. Transformational leadership also affects organizational culture, which ultimately influences employee performance [12,21,22]. In addition, transformational leadership also impacts the quality of work life related to employee performance [23,24,25].
Previous researchers have widely carried out studies on employee engagement and employee performance, but they still indicated different study results that created some research gaps allowing other researchers to investigate the similar themes; employee engagement and employee performance. Therefore, the researchers were interested in re-examining transformational leadership and employee performance with a good organizational culture, employee engagement and quality of work life as mediating variables.
The present research was conducted at Credit Unions (CU) in West Kalimantan because they were developing rapidly and surviving from the competition with other financial institutions. These savings and loans cooperatives or credit unions have the nature of cooperation in which everyone who wants to make savings and loans must first become a member. At the end of the year, they always hold an Annual Member Meeting (RAT) and the distribution of Residual Revenue (SHU). In addition, CU management provides knowledge about the importance of saving and other knowledge about finances (habituation to frugal living, the wise use of loans and education about members' rights and obligations). CU upholds the values of togetherness and justice; they fight for their members while improving the welfare of the surrounding community. The vision and mission to create a just and prosperous society through a populist economic movement become an option or alternative for the poor to rise economically. CU does not act discriminatory because each member is treated equally regardless of race, ethnicity and religion. Thus, the phenomenon and characteristics of CU in West Kalimantan were interesting to be studied in depth through this research.
Literature Review
Transformational Leadership and Employee Performance
Transformational leadership is a predictor of employee performance [26,27]. The transformational behaviour of a leader, such as intellectual stimulation, can encourage employees to be more persistent and wiser at work, which in turn will improve their performance [28]. Transformational leadership is also believed to improve the overall quality of operations within the organization [29], which later impacts positive organizational outcomes such as the quality of employee performance [30]. Previous studies in the context of organizations in Korea showed that transformational leadership was the main catalyst in driving the positive attitudes and performance of employees [31]. All dimensions of transformational leadership led to improved performance [32]. Other research also corroborated that leadership style had a positive impact on employee performance [12,33]. Accordingly, transformational leadership had a positive and significant impact on employee performance [34,35]:
H1: There is a direct impact of transformational leadership on employee performance at the Credit Union in West Kalimantan
Transformational Leadership and Organizational Culture
A work following organizational goals and directed appropriately can foster employees' trust and confidence in the organizational leader. A transformational leader will be able to inspire and motivate employees towards new ideas or goals faced by the organization in response to the changing business needs [36]. A strong influence on transformational leadership makes the leader an ideal role model for employees [37].
Transformational leadership is an essential enabler of organizational culture [38,39]. Transformational leaders will mobilize employees' passion for meeting organizational goals, strategies and values through employee engagement and empowerment [40,41]. A transformational leader can directly impact organizational culture with the support of idealized influence, inspirational motivation, intellectual stimulation and individual consideration [38]. A study conducted by [42] found that when employees could identify their adaptive, flexible and integrative organizational cultures, they could find the meaning of the organization's vision and mission. However, it must be supported by a leader possessing a transformational leadership style, which was also considered a source of cultural development supporting employee development and individual consideration [43].
H2: There is a direct impact of transformational leadership on organizational culture at the Credit Union in West Kalimantan
Transformational Leadership and Employee Engagement
Leaders can guide individuals or groups to achieve goals and develop employee work engagement [44,45]. Leadership style is one of the critical factors that affect employee engagement [46]. Transformational leadership is perceived as inspiring employees by intellectually stimulating them to evoke their ideals and demonstrate individual considerations by paying attention to their needs [47]. As a result, employees begin to feel obligated to reciprocate through a high level of engagement [48,49].
Many studies revealed a significant positive correlation between transformational leadership and employee engagement [50,51,52]. In the diary study conducted by Tims et al. [53] and Breevaart et al. [54], it was found that there was a positive correlation between daily fluctuations in transformational leadership and daily employee engagement. Similarly, Ghadi et al. [55] and Kopperud et al. [56] confirmed that transformational leadership had a positive impact on employees' level of engagement.
Yukl [57] identifies that transformational leadership can change the mindset of organizational members to engage in work, mission and goals. Transformational leadership significantly and positively affects engagement [34,58]. Previous research also corroborated that a leader possessing transformational leadership behaviours could significantly impact employee engagement [27,55,59]. In line with other studies, Breevaart et al. [54] discovered that among the 61 Norwegian navy personnel, leaders with a transformational style were considered to have a positive and significant impact on employee engagement. Lai et al. [27] also revealed a positive correlation between transformational leadership and employee engagement in an empirical study involving 507 nurses.
H3: There is a direct impact of transformational leadership on employee engagement at the Credit Union in West Kalimantan
Transformational Leadership and Quality of Work Life
A leader must be able to help employees feel passionate about working in an organization. Every leader and manager must understand the requirements, needs and expectations of employees and create an appropriate work environment to motivate them [60]. Leadership style is believed to influence the quality of work life [46]. One of the leadership styles that can affect the quality of work life is transformational leadership [61]. Numerous studies revealed that transformational leadership correlated positively and significantly with the quality of work life [24,25,62].
H4: There is a direct impact of transformational leadership on the quality of work life at the Credit Union in West Kalimantan
Organizational Culture and Employee Performance
The better the organizational culture of a company, the higher the job satisfaction that leads to job improvement [63]. It is in line with research by Brahmasari and Siregar [64], which found that organizational culture had a positive and significant impact on employee performance at PT. Central Proteina Prima Tbk. Organizational culture is viewed to have a significant impact on building positive employee performance [65,66]. It also fosters positive behaviour in the company environment, which positively impacts employee performance [22,63,67]:
H5: There is a direct impact of organizational culture on employee performance at the Credit Union in West Kalimantan
Employee Engagement and Employee Performance
Employee engagement implies that the employees are physically, cognitively and affectively connected to their workplace [68]. The engaged employees perform better than the uninvolved ones by showing positive emotions (enthusiasm, joy and happiness) and having better health [69]. Engagement also has other impacts, such as reduced fatigue, increased satisfaction, commitment and higher performance [70], making employees feel that they belong to the organization and have a lower turnover intention [71]. In addition, when employees are engaged in their work, they tend to perform beyond expectations [72]. Besides, they will likely dedicate their resources (cognitive, emotional and physical) to play a role in work to contribute to organizational goals [68]. Previous empirical studies have shown that employee engagement was positively correlated with employee performance [73,74]; for instance, in the service industry such as hospitality, where employee engagement had a significant impact on improving employee performance [75,76]:
H6: There is a direct impact of employee engagement on employee performance at the Credit Union in West Kalimantan
Quality of Work Life and Employee Performance
The quality of work life program has two objectives: increasing employee productivity and increasing employee satisfaction [77]. Quality of work life is concerned with salary issues, working conditions, personal conflicts, pressures at work, lack of freedom and challenging tasks [78]. Therefore, the quality of work life is considered to bring valuable material and enthusiasm to return to work. According to Kulkarni [78], the quality of work life includes decent and equal compensation, working conditions with safety and health care, promotion opportunities to develop human capacity, sustainable development and security, social integration and constitutionalism in the workplace. These factors form the basis of employees' quality of work life, assisting them to have a positive working environment and developing their abilities. Quality of work life is treated as an essential factor that affects employee performance [9,23,77,79].
H7: There is a direct impact of quality of work life on employee performance at the Credit Union in West Kalimantan
Organizational Culture as a Mediator between Transformational Leadership and Employee Performance
Transformational leadership is a leadership style that can develop a culture that focuses on improving employee performance and developing abilities [80]. In the previous research, organizational culture was one of the mediating variables between transformational leadership and organizational performance [81]. Sarros et al. [82] confirmed it by exploring the significant mediation of a performance-oriented organizational culture as a mediating variable between transformational leadership and organizational climate. Another study has also shown the mediating role of organizational culture in the correlation between transformational leadership and psychological empowerment [83]:
H8: There is an indirect impact of transformational leadership on employee performance through organizational culture at the Credit Union in West Kalimantan
Employee Engagement as a Mediator between Transformational Leadership and Employee Performance
A transformational leader can encourage employee engagement, defined as employees' cognitive, emotional and behavioural state directed towards the expected organizational outcome [84]. Such encouragement aims to trigger positive behaviours and attitudes of employees towards work, as well as support their self-efficacy towards challenging visions and goals [55,85]. Saks [2] also suggests that the engaged employees have a higher trust in the organization and a better relationship with their leader. Several studies have explained the motivational process of a leader in the way transformational leadership affects employee performance through engagement [86,87].
Buil et al. [28] support the idea that employee engagement plays a mediating role in the correlation between transformational leadership and performance. Lai et al. [27] also suggest a mediating role of employee engagement in the correlation between transformational leadership and performance. Lee [88] asserts that transformational leadership and transactional leadership positively and significantly impact engagement. Furthermore, engagement has a significant and positive impact on employee performance [89,58,34]:
H9: There is an indirect impact of transformational leadership on employee performance through employee engagement at the Credit Union in West Kalimantan
Quality of Work Life as a Mediator between Transformational Leadership and Employee Performance
Transformational leaders will encourage employees to be delighted at work, which later impacts improved employee performance [26]. Yiing et al. [46] suggest that leadership style might affect the quality of work life, engagement and Organizational Citizenship Behavior (OCB), which has an impact on employee performance and can mediate the correlation between leadership style and employee performance. Hermawati and Mas [23] state that the quality of work life mediates the correlation between leadership style and employee performance. Previous studies have also revealed something similar, in which the quality of work life had a role as a mediating variable [90,91]:
H10: There is an indirect impact of transformational leadership on employee performance through quality of work life at the Credit Union in West Kalimantan
Measurements
Causal research was chosen as the design of this study. Data collection was administered by a questionnaire employing a five-point Likert scale (1 = strongly disagree, 5 = strongly agree). The total sample in this study was 376 respondents. The sampling technique was purposive sampling, with the respondents' criteria: employees who worked at the Lantang Tipo, Pancur Kasih and Keling Kumang Credit Unions in West Kalimantan as permanent employees working for at least one year. This research employed Structural Equation Modeling (SEM) using the AMOS 24 software to analyze and evaluate the research construct's measurement models and structural models. The model fit testing was carried out based on goodness-of-fit index parameters such as CMIN/DF, Root Mean Square Error of Approximation (RMSEA), Root Mean Square Residual (RMSR), Goodness of Fit Index (GFI), Tucker Lewis Index (TLI), Incremental Fit Index (IFI), Comparative Fit Index (CFI) and Normed Fit Index (NFI). The data validity relied on the Standardized Loading Factor (SLF), whose value must be ≥0.50. Meanwhile, the construct reliability relied on tabulation results of the Construct Reliability (CR) and Average Variance Extracted (AVE) values. Furthermore, the SEM analysis was aimed at determining whether the research hypothesis was accepted or rejected. The SEM analysis displays the t-score value for each coefficient. A hypothesis can be declared to have a causal relationship if the value of t-score ≥ t-table (1.96) with a significance level of α (commonly, α = 0.05). Meanwhile, the indirect impact of the mediating variable was determined by conducting the Sobel test.
Respondent Characteristics
The analysis of the respondents’ profiles in this research was based on the following demographic characteristics.
Measurement and Structural Models
The results of goodness of fit, validity and reliability tests can be described as follow Table 2.
Table 1: Characteristics of Respondents
Category |
| Item | f | % | |
Gender |
| Male | 178 | 47 | |
| Female | 198 | 53 | ||
| Total | 300 | 100 | ||
Education |
| Elementary School | 0 | 0 | |
| Junior High School | 4 | 1 | ||
| Senior High School | 126 | 34 | ||
| 3-year Diploma (D3) | 54 | 14 | ||
| Bachelor Degree (S1) | 163 | 43 | ||
| Master Degree (S2) | 29 | 8 | ||
| Total | 300 | 100 | ||
Table 2: Measurement Model Results
Variabel | Item | SLF | AVE | CR |
Transformational Leadership | I believe in the vision and mission conveyed by the leader | 0,906 | 0,85 | 0,98 |
I believe that the leader has high integrity | 0,904 | |||
My leader can communicate the high expectation | 0,921 | |||
My leader is enthusiastic about inspiring to achieve organizational goals | 0,926 | |||
My leader can foster creativity and innovation | 0,937 | |||
My leader can solve every problem meticulously | 0,913 | |||
My leader pays attention and provides assistance in completing work | 0,921 | |||
My leader provides encouragement to excel the employees | 0,951 | |||
Organizational Culture | Company management gives freedom to innovate in getting the job done | 0,808 | 0,72 | 0,97 |
Company management encourages employees to dare to take risks in making decisions | 0,799 | |||
Company management expects employees to work according to the assigned details | 0,875 | |||
Company management pays attention to the work results achieved by employees | 0,868 | |||
Company management expects employees to have a high level of aggressiveness at work | 0,870 | |||
Company management expects employees to have a high level of competitiveness at work | 0,884 | |||
Employee Engagement | I have high energy in getting the job done | 0,923 | 0,85 | 0,98 |
I have good adaptability (resilience) at work | 0,910 | |||
I do not give up easily in completing the work given | 0,910 | |||
I can work passionately because I feel needed by the company | 0,908 | |||
I have the inspiration and perseverance to get the job done | 0,924 | |||
I feel that the work given is a challenge to be completed properly | 0,934 | |||
I have full attention to the work assigned | 0,924 | |||
I have a high concentration on getting the job done | 0,921 | |||
I am always serious about completing the work given by the company | 0,919 | |||
Quality of Work Life | I receive decent compensation like any other employee | 0,899 | 0,80 | 0,98 |
I receive adequate and fair compensation | 0,934 | |||
I work in a comfortable working environment | 0,904 | |||
I have a working environment that pays attention to health | 0,904 | |||
I can use my skills to get the job done | 0,921 | |||
The work I do has high job security | 0,887 | |||
I feel that I belong to the company and can move forward with the company | 0,864 | |||
My company has ethical behaviour towards the surrounding environment | 0,853 |
Table 2: Continue
Employee Performance | I can get the job done on time | 0,958 | 0,93 | 0,98 |
I have a high level of skill in working | 0,960 | |||
I pay attention to the hygiene factor in working | 0,966 | |||
I can achieve work results following the company's standards | 0,966 | |||
I can achieve work results exceeding the company's standards | 0,972 | |||
I obey all instructions given by the leader | 0,971 | |||
I have talents and abilities matching my work field | 0,950 | |||
I have the initiative to working | 0,964 | |||
I can work together harmoniously with co-workers | 0,958 | |||
I have a high commitment to the company | 0,959 |
Table 3: Goodness of Fit Index
Goodness of Fit Index | Cut off Value | Results |
CMIN/DF | ≤ 3.00 | 2.131 |
RMSEA | ≤ 0.08 | 0.055 |
NFI | ≥ 0.90 | 0.917 |
IFI | ≥0.90 | 0.954 |
TLI | ≥0.90 | 0.952 |
CFI | ≥0.90 | 0.954 |
Table 4: Hypothesis Testing
Estimate | S.E. | C.R. | P | Description | |||
Employee_Engagement | <--- | Transformational Leadership | ,419 | ,030 | 13,835 | *** | Accepted |
Organizational Culture | <--- | Transformational Leadership | ,260 | ,027 | 9,619 | *** | Accepted |
Quality of Work Life | <--- | Transformational Leadership | ,377 | ,029 | 12,937 | *** | Accepted |
Employee Performance | <--- | Employee_Engagement | ,653 | ,064 | 10,203 | *** | Accepted |
Employee Performance | <--- | Quality of Work Life | ,304 | ,065 | 4,668 | *** | Accepted |
Employee Performance | <--- | Organizational Culture | ,544 | ,076 | 7,125 | *** | Accepted |
Employee Performance | <--- | Transformational Leadership | ,317 | ,053 | 5,935 | *** | Accepted |
Based on Table 2, the Standardized Loading Factor (SLF) of all indicators in the full model had a value above 0.50. It indicated that all indicators on the five variables were declared valid and capable of measuring the full model construct. Furthermore, the reliability test also showed the corresponding results. The full model construct was declared reliable and capable of carrying out measurements consistently. It can be seen from the Average Variance Extracted (AVE), which obtained a value above 0.50 and the Construct Reliability (CR), which gained a value above 0.70.
Based on the Goodness of Fit (GOF) measurement results in Table 3, it can be stated that the suitability requirements of the model were acceptable. The data illustrate that there were six measurements categorized as a good fit. The values of CMIN/DF = 2.131 (≤3.00) and RMSEA = 0.055 (≤0.08) were declared fit. Likewise, the values of NFI = 0.917, IFI = 0.954, TLI = 0.952 and CFI = 0.954 were all above 0.90, so it can be concluded that the model was fit and accepted.
Hypotheses Testing
The test results of the causal relationship between variables in the present research construct are as follows.
Based on Table 4, the t-score value of the impact of transformational leadership on employee performance was 5.935, greater than the t-table value (1.96). Likewise, the p-value was less than 0.001; smaller than 0.05 (α = 0.05). These results were related to the first hypothesis, in which transformational leadership had a positive and significant impact on employee performance. For the second hypothesis, the t-score value of the impact of transformational leadership on organizational culture was 9.619 and the p-value was less than 0.001. It proved that transformational leadership had a positive and significant impact on organizational culture. For the third hypothesis, the t-score value of the impact of transformational leadership on employee engagement was 13.835 and the p-value was less than 0.001. It indicated that transformational leadership had a positive and significant impact on employee engagement. For the fourth hypothesis, the t-score value of the impact of transformational leadership on the quality of work life was 12.937 and the p-value was less than 0.001. These results were per the hypothesis that transformational leadership had a positive and significant impact on the quality of work life. For the sixth hypothesis, the t-score value of the impact of organizational culture on employee performance was 7.125 and the p-value was less than 0.001, suggesting that organizational culture had a positive and significant impact on employee performance. For the seventh hypothesis, the t-score value of the impact of employee engagement on employee performance was 10.203 with a p-value less than 0.001, indicating that employee engagement had a positive and significant impact on employee performance. As for the eighth hypothesis, the t-score value of the impact of quality of work life on employee performance was 4.668 and the p-value was less than 0.001. Thus, the quality of work life was declared to have a positive and significant impact on employee performance (Figure 1).
Furthermore, the indirect impacts of the mediating variables are presented in Table 5, which contains the Sobel test results.
Table 5: Sobel Test - Significance of Mediation
| Sobel test statistic | Two- tailed probability |
Transformational Leadership --> Organizational Culture --> Employee Performance | 3,27 | 0,001 |
Transformational Leadership --> Employee Engagement --> Employee Performance | 5,81 | *** |
Transformational Leadership --> Quality of Work Life --> Employee Performance | 2,59 | 0,009 |
Figure 1: Full Model Structural Test
Based on the results of the Sobel test in Table 5, the obtained Sobel test statistic value was 3.27 and the p-value was 0.001. These results showed that the value of the Sobel test statistic was greater than the t-table (1.96). Likewise, the gained p-value was smaller than 0.05 (α = 0.05). It indicated a significant indirect impact of transformational leadership on employee performance through organizational culture. The corresponding results were also obtained in the ninth hypothesis, in which the Sobel test statistic value was 5.81, greater than 1.96 and the p-value was 0.001, smaller than 0.05 (α = 0.05). Thus, there was a significant indirect impact of transformational leadership on employee performance through employee engagement. The tenth hypothesis depicted the Sobel test statistic value and the p-value suggesting that the quality of work life acted as a mediating variable. It can be seen from the Sobel test statistic value of 2.59, greater than 1.96 and a p-value of 0.009, smaller than 0.05 (α = 0.05). Therefore, it can be stated that there was a significant indirect impact of transformational leadership on employee performance through the quality of work life.
Transformational leadership had a positive and significant impact on the organizational culture of the Credit Unions in West Kalimantan. Transformational leaders were believed to be a source of inspiration and motivation for employees to work following organizational goals. Being an ideal role model, driving enthusiasm, intellectual stimulation and individual consideration made transformational leaders an essential enabler of organizational culture. This study corroborated the previous research, which stated that transformational leadership had a direct impact on organizational culture [38,39,43]. The transformational leadership style at the Credit Unions in West Kalimantan triggered a management space to innovate in work, dare to take risks in making decisions, work following the assigned details, be oriented towards work results and have aggressive and competitive power at work. The transformational leaders fostered hope and trust to meet organizational goals, strategies and values leading employees to identify the adaptive, flexible and integrative organizational cultures to understand and realize the organization's vision and mission.
Transformational leadership had a positive and significant impact on employee engagement at the Credit Unions in West Kalimantan. The stronger the transformational leadership style felt by employees, the more engaged they were in the organisation's work, mission and goals. Transformational leaders could stimulate employees to feel obligated to respond in the form of a high level of engagement. The present research results supported the previous studies; it has been widely proven that there was a significant positive correlation between transformational leadership and engagement [27,52,55,54,59]. Transformational leaders at the Credit Unions in West Kalimantan provided inspirational motivation to their employees to have high energy in working, be able to adapt, not give up easily, be excited because they feel needed by the company, have inspiration and perseverance, be challenged by work and have attention and concentration in getting the job done.
Transformational leadership had a positive and significant impact on the quality of work life at the Credit Unions in West Kalimantan. Transformational leaders encouraged employees' levels of satisfaction, motivation, engagement, experience and commitment regarding the quality of work life. This study's results supported the findings of previous research, in which transformational leadership was declared to have a positive and significant correlation with the quality of work life [24,25,46,60,62]. Credit Unions in West Kalimantan, led by the transformational leaders, were believed to open up space for passion for work, understanding the requirements, needs and expectations of employees, decent and fair compensation, a comfortable work environment, job health and security, opportunities for skill implementation and ethical behaviours towards the working environment.
Organizational culture had a positive and significant impact on employee performance at the Credit Unions in West Kalimantan. The values, strategies, vision and mission and norms of trust and understanding embraced by the Credit Unions in West Kalimantan were believed to facilitate members of the organization to behave in a manner that supported their performance improvement. The results of this study were in line with previous research, which stated that organizational culture could form a positive behaviour in the company environment, which in turn had a positive impact on employee performance [22,63,65,66,67].
Employee engagement had a positive and significant impact on employee performance at the Credit Unions in West Kalimantan. Physically, cognitively and affectively, the Credit Union employees in West Kalimantan felt connected to their workplace. Positive emotions such as enthusiasm, joy and happiness were well stimulated in the working environment, which later affected several things, such as the reduced amount of stress and fatigue at work, the emergence of a sense of satisfaction, commitment and a sense of belonging to the organization along with the lowered level of turnover intention. When employees were engaged, they might give the best dedication to perform better. The present study results were per previous research stating that employee engagement was positively and significantly correlated with employee performance [74,75,76].
Quality of work life had a positive and significant impact on employee performance at the Credit Unions in West Kalimantan. The higher the quality of work life, the higher the improvement in employee performance. The quality of work life at the Credit Unions in West Kalimantan described the situation of employees who were satisfied with working conditions, resolution of personal conflicts, expression of freedom, challenges at work, promotion opportunities and decent and fair compensation. This study's findings supported previous research justifying that the quality of work life was one of the critical variables to present employees' best performance [9,23,77].
Organizational culture mediated the impact of transformational leadership on employee performance at the Credit Unions in West Kalimantan. This study's results corroborated the previous research reinforcing the significant mediating role of organizational culture. In previous studies, organizational culture mediated the correlation between transformational leadership and organizational climate [82] and the correlation between transformational leadership and psychological empowerment [83]. Transformational leaders were able to provide inspirational and motivational stimulation, supporting employees to have a high performance and become ideal role models in implementing the values, strategies, vision and mission and norms of trust embraced by the Credit Unions in West Kalimantan. Thus, employees could be moved in attitude and behaviour that might be a reinforcement to perform well following the expectations in achieving organizational goals.
Employee engagement mediated the impact of transformational leadership on employee performance at the Credit Unions in West Kalimantan. Transformational leaders were able to bring the enthusiasm, happiness and love of Credit Union employees in West Kalimantan to work optimally and dedicatedly. The engagement experienced by employees stimulated them to feel the urge to reciprocate and reward the company with the best performance they had. This study confirmed the previous research findings, asserting that employee engagement played a mediating role in the correlation between transformational leadership and performance [27, 28,58,86,88].
Quality of work life mediated the impact of transformational leadership on employee performance at the Credit Unions in West Kalimantan. The leaders with a transformational style at the Credit Unions in West Kalimantan could create a comfortable working environment, understand the needs and expectations of employees, occupational health and safety and the quality of work life that could meet employees' expectations. The employees experienced ethical behaviours in their working environment. They also had access to develop their capacities and acquire space for sustainable development and security, social integration and constitutionalism in the workplace. These factors became the basis of the quality of work life for employees to assist them in having a positive work environment and develop their abilities, which in turn affected their good performance. The present research findings were in line with previous studies in which the quality of work life was discovered to mediate the correlation between leadership style and employee performance [23,26,46].
Acknowledgment
Researchers expressed their gratitude to the Faculty of Economics and Business of Universitas Tanjungpura, the Doctoral Program in Management at Universitas Tanjungpura and the Lantang Tipo, Pancur Kasih and Keling Kumang Credit Unions in West Kalimantan.
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