Transformational leadership is a leadership style in which a leader gives paramount concern to the problems in employees and development needs, namely providing motivation [1]. According to Hartanto [2], there are four characteristics of transformational leadership: individual consideration, influence idealization, inspirational motivation and intellectual stimulation. 

Employees tend to imitate their leader’s leadership style as the leader is a role model for them. A leader’s authority, assertiveness and activeness must grow so that employees will not easily ignore orders and work from him. The followers put trust, admiration, loyalty and respect for the leader and are motivated to do more than they are initially expected to do. Vision, mission and strategy are created by leaders with leadership traits. Plans are created by management through specific steps of scheduling, while budgets constitute plans with financial targets. Therefore, leadership is highly needed to improve the productivity of employee performance.

In general, performance is defined as the ratio of outputs and inputs. Performance is a general concept that aims to provide more goods and services to humans using diminishing natural resources. Performance is one of the most critical issues in the company because if employee performance is poor, then employee productivity is low. If the leader ignores this, it will create a severe problem for the company. Human resource is critical for companies to achieve their vision, mission and goals. The high and low productivity of a company’s employees is influenced by the leader’s leadership style and ability to mobilize his subordinates. Therefore, a leader takes prominent roles for employees in carrying out their duties.    

As time passes, more advancements occur from various aspects, especially in this globalization era. A leader must be prepared and able to face developments and progress due to various changes. If the leader cannot deal with changes, employees will experience setbacks and their productivity levels will decrease dramatically. Hence, the company’s leader with a transformational leadership style is likely to increase employee productivity.

In addition, competence is essential for employee performance. A company requires a workforce with capabilities and skills to manage the company so that company activities are well-organized, contributing to employee performance outcomes. Good work outcomes result from optimal work aligned with the company’s standards and encourage the achievement of the company's goals. Brahmasari and Suprayetno [3], contend that business ability is the final work outcomes achieved by employees on the work assigned based on accuracy, experience and time to complete the work.

The increase in transformational leadership and competence is supported by adequate information technology. Information technology is part of the information technology system, which refers to the technology used in conveying and processing information. Information technology has brought fundamental changes to companies. Therefore, information technology systems are essential in determining the companies’ competitiveness and ability to improve performance in the future. Information technology can also help organizational leaders channel ideas or directions they intend to convey to subordinates, thereby supporting employee performance. Sarosa found that if the behavior of transformational leadership style is applied more often, it will significantly and positively impact the quality of psychological empowerment of subordinates. The transformational leader who devotes attention to individuals can direct his organization’s visions and missions, provide motivational support and create novel ways of working. It then has a role in the psychological empowerment of subordinates. The use of technology must be supported by basic computer knowledge, skills and motivation. The central aspect of technology use is the human resource competence of employees or users. This competence greatly influences an employee to complete his work. Therefore, to achieve well-completed work, it must be handled by one with sufficient competence in that work.

Literature Review

Transformational Leadership and Employee Performance: The most critical function of leadership is motivating subordinates. Transformational leadership is deemed to influence a company, institution or company in non-financial aspects, such as job satisfaction and employee performance. Transformational leaders motivate their employees to demonstrate incredible performances by transforming their thoughts and attitudes to achieve unexpected performance. One of the behaviors a transformational leader should demonstrate is the influence of idealism, motivation, intellectual stimulation and individual consideration [4].

Several previous studies have shown that there is a significant positive effect of transformational leadership on performance [5,6]. Aqmarina et al. [7], also revealed a relationship between transformational leadership and performance. Further, Jankelová et al. [8], found a positive influence of transformational leadership on employee performance. Moroever, Karimikia and Joseph [9], pointed out that work autonomy significantly affects performance. Jyoti and Bhau [10], expressed that transformational leadership characteristics positively affect performance. Lastly, Elgelal and Noermijati [11], argued that if an inspirational leadership motive is embedded in the performed leadership, it will improve employee performance.

• H1: Transformational leadership affects employee performance

Competence and Employee Performance

The factor that contributes to the improvement of employee performance is competence. In this case, competence is the ability of an employee to work neatly and perform attitude to complete work in his expertise which provides levels of hard work. It is aligned with Abdi and Wahid [12], who expressed that highly competent employees can increase their work outcomes. This theory is supported by empirical studies by Kadir et al. [13], who discovered that competence has a positive and significant effect on work outcomes performed by subordinates. Employees who have expertise in their work will be more thorough in their work outcomes. Furthermore, the results of research conducted by Krisnawati and Bagia [14], found that employee competence affects employee performance.

• H2: Competence affects employee performance

Information Technology and Employee Performance

Information technology is a type of technology that constitutes technical equipment to process and convey information. Information technology includes a series of equipment that serves as tools for processing data or information, manipulation tools and information management tools. In this era of globalization, technology is experiencing rapid development. This is indicated by increasingly sophisticated technological equipment in a broader range. With the advancement of information technology, activities can be completed effectively and efficiently with optimal results [15].

With information technology, activities will be implemented more efficiently and effectively, thereby improving employee performance. Employee performance is a work achievement or output, both in terms of quality and quantity, achieved by an employee in his job according to the responsibilities assigned to him. The individual performance aims to align individual work expectations with company goals. The alignment between efforts to achieve individual goals and company goals will give a good performance. Purba and Tamubolon [16], showed that information technology affects the improvement of employee performance.

• H3: Information technology affects employee performance

Information Technology Mediates the Effects of Transformational Leadership and Competence On Employee Performance

Information technology is part of the information technology system, which refers to the technology used to convey and process information. Information technology has made considerable changes to companies. Hence, the information technology system is crucial in determining the competitiveness and ability of companies to boost their performance years ahead. Information technology also helps company leaders’ direct ideas they need to convey to subordinates to support employee performance. Sarosa suggested that if the behavior of transformational leadership style is acted more frequently, it will significantly and positively impact the quality of psychological empowerment of subordinates. The transformational leader who focuses on individuals can pursue the visions and missions of his company, generate motivational support and devise new working strategies. All of these contribute to the psychological empowerment of subordinates. 

Moreover, using technology requires basic computer knowledge, skills and motivation. The critical aspect of technology use is the human resource competence of employees or users. This competence dramatically affects an employee in completing his work. For that reason, to get well-completed work, it should be managed by a competent employee. Suriyanti [17], also revealed that information technology mediates the effects of transformational leadership and competence on employee performance.

• H4: Information technology mediates the effects of transformational leadership and competence on employee performance

Research Model

The operational variables in this study are divided into transformational leadership and competence as independent variables, employee performance (Y) as the dependent variable and information technology (Z) as the moderating variable. Figure 1 depicts the theoretical framework used in this study to measure transformational leadership, competence, information technology and employee performance from suriyanti [17]. The momentum research instrument used a five-point Likert scale, where 1 indicates strongly disagree and 5 denotes strongly agree.

Figure 1: Research Framework

Population and Sample

Sugiyono [18], states that the population is a group of units used for analysis and contains expected information. The population in this study involved 351 employees of PT Pegadaian (Persero) in Banda Aceh City. The samples consisted of 189 employees calculated using the Slovin formula. These samples were then chosen using the proportional random sampling technique. Among the respondents who completed survey, 46% of them are male and 54% are female.

Regarding age, most respondents (N = 101, 53.4%) aged 25-35 years. Sixty respondents (31.7%) were 36-45 years and 8 (4.2%) were more than 45 years old. Regarding education level, 60 respondents (31.7%) received an associate’s degree, 124 respondents (65.6%) earned a bachelor's degree and 5 respondents (2.6%) gained a postgraduate.

RESULTS

Table 2 presents the validity test results using Confirmatory Factor Analysis (CFA). Each clue to each evolution has a critical stack count in the direction of the measurement evolution. CFA can be a multivariate fact-finding strategy to test how well a measured factor predicts multiple constructs. In this case, all configurations received factor loadings greater than 0.40. All constructs are important [19]. The reliability test of Cronbach's alpha found that transformational leadership scored 0.922, competence scored 0.891, information technology scored 0.928 and employee performance scored 0.925.

Table 1: Respondents’ Characteristics

Source: Primary Data, 2022 (processed)

Table 2: Item Loadings and Cronbach’s Alpha

Table 3 demonstrates that the mean of the variables ranges from 4.30064 to 4.1548, with information distribution levels ranging from 0.6845 to 0.7421. Among all variables, the transformational leadership variable has the greatest mean.

Table 3: Mean, Standard Deviation, dan Correlation Between Variables

Table 4 illustrates the relationship among the variables. Transformational leadership affects employee performance with a probability of less than 0.05 and a regression coefficient (β) of 0.406. This result supports hypothesis 1. This finding is analogous to several previous studies revealing a significant positive effect of transformational leadership on performance [5,6]. Aqmarina et al. [7], also showed a relationship between transformational leadership and performance. Jankelová et al. [8], confirmed that transformational leadership has a positive influence on employee performance. Karimikia and Joseph [9], pointed out that work autonomy significantly influences performance. Jyoti and Bhau [10], expressed that transformational leadership characteristics positively influence performance. Then, Elgelal and Noermijati [11], argued that an inspirational leadership motive can improve employee performance.

Furthermore, Table 4 describes that competence affects employee performance with a probability of less than 0.05 and a regression coefficient (β) of 0.508. This result, therefore, confirms hypothesis 2. In line with the findings of Abdi and Wahid [12], highly competent employees contribute to increased work outputs. This theory is also supported by empirical studies conducted by Kadir et al. [13]. They found that competence has a positive and significant effect on the work outcomes possessed by subordinates. Competent employees will be more meticulous in their work outcomes. Similarly, Krisnawati and Bagia [14], reported that employee competence affects employee performance.

The findings also revealed that information technology affects employee performance with a probability of less than 0.05 and a regression coefficient (β) of 0.744. Therefore, hypothesis 3 is accepted. With information technology, activities will be more efficiently and effectively managed, thus, enhancing employee performance. Employee performance is an achievement of work outputs in terms of quality and quantity achieved by an employee while doing his job related to the assigned responsibilities. Individual performance becomes a tool that tailors individual work expectations and company goals. The conformity between efforts to achieve individual and company goals contributes to the realization of good performance. Purba and Tamubolon [16], revealed that information technology affects employee performance improvement.

Table 4: Regression Analysis

Table 5: Mediating Effect of Information Technology

*Significance level p<0.05

Table 6: Hypothesis Testing Conclusion

Figure 2: The Relationship between Variables

Hypothesis 4 predicts the mediating effect using regression analysis. The regression coefficient value of transformational leadership on employee performance mediated by information technology is (β) 0.303 with a probability of 0.05. Furthermore, the effect of competence on employee performance after being mediated by information technology is (β) 0.396 with a probability of 0.05. Therefore, hypothesis 4 is confirmed. One may conclude that the effect of transformational leadership and competence on employee performance is partially mediated by information technology. Suriyanti’s [17], research discovered that information technology mediates the effects of transformational leadership and competence on employee performance.

The study results revealed several important points: transformational leadership significantly affects employee performance; competence significantly affects employee performance; information technology has a significant effect on employee performance; and information technology mediates the effects of transformational leadership and competency on employee performance. These findings imply that companies should improve employee competence, especially related to information technology, to enhance employee performance. In addition, transformational leadership is necessary to motivate employees to increase their performance.

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