P-ISSN: 2808-0467

E-ISSN: 2808-5051

Homepage: https://iss.internationaljournallabs.com/index.php/iss

1196 This work is licensed under CC BY-SA 4.0

THE INFLUENCE OF SITUATIONAL LEADERSHIP AND

ORGANIZATIONAL CULTURE MODERATED BY COMPENSATION

ON EMPLOYEE PERFORMANCE

INTRODUCTION

11,625,313 million in 2019 to IDR 12,659,705 million in 2020. In addition, this company

received the Indonesia Outstanding Performers In Pandemic Era 2020 Award in the Successfull

Business in Pandemic Era category from SWA Magazine.

The increase in revenue growth in 2020 in this company, followed by the achievement of

awards, became a positive phenomenon while explaining that this company was able to

The Influence of Situational Leadership and Organizational Culture Moderated by Compensation on

1197 Interdisciplinary Social Studies, 1(9), Jun 2022

maintain a competitive advantage in the current era of information technology development,

even during the pandemic that occurred since the beginning of 2019. Achieving this certainly

in a very tight competition.

Performance becomes a keyword on the achievement of organizational goals so that the

company is required to improve the individual performance of its employees (Istijanto, 2006).

In addition, Gibson (2003) in Sagita et al. (2018) argues that every employee in the organization

is required to make a positive contribution through performance, given that the performance of

the organization depends on the performance of its employees. Furthermore, leadership is one

of the factors that has an important and central role in the life of the organization, including in

improving employee performance. As Bassem and Adel (2018) state that leadership is the art

of communicating a clear vision and empowering employees to achieve organizational goals.

furthermore, the leadership style of a manager according to the theory of leadership behavior

The ability to self-characterize and adaptability to the demands of the environment can direct

managers to effective behavior (Hersey & Blanchard, 1977). Leadership will be effective if the

leader's self-ability is supportive in dealing with situations and conditions that come from the

company's internal and external environment. Thus, a situational leadership style is

indispensable in the face of constantly changing situations and conditions.

Situational leadership as effective leadership to be applied to the company PT Midi Utama

Indonesia Tbk., to face the current conditions and challenges of globalization. Stoner et al.

(1996) states that the effectiveness of a manager's leadership depends on the application of

leadership style to the needs of the situation. In this case, the leadership style used is siteional

leadership, where the leader will contribute best to the achievement of organizational goals that

understanding of the organization and organizational resources in a competitive scenario.

Among them, organizational culture is considered one of the most important intangible

strategic resources in developing competitive advantages. Organizational culture guides the

members of the company in carrying out their duties and responsibilities. A strong culture is a

The Influence of Situational Leadership and Organizational Culture Moderated by Compensation on

1198 Interdisciplinary Social Studies, 1(9), Jun 2022

useful instrument in directing employee behavior to have higher work performance. Therefore,

at the beginning of his career, an employee must understand his organizational culture (Pujiono

members of the organization. The organization will carry out activities well as long as it has an

effective organizational culture. An effective organizational culture is a culture that can be

strongly applied by members of the organization, but a strong organizational culture will not

necessarily run easily, so adjustments are needed.

Based on the explanation above, it is known that the application of situational leadership

and organizational culture is an external factor as well as a concept of a process of improving

the performance of quality employees in achieving and maintaining competitive advantage. All

of that should require effective resource management. Strategies in managing human resources

are very important to pay attention to, including through the application of leadership styles

and organizational culture that are appropriate in accordance with the demands of the situation

style is carried out appropriately in accordance with the needs of subordinates, it will provide

enthusiasm in improving employee performance. In another study, situational leadership had

an insignificant positive influence on employee performance (Azizah et al., 2017; Purnamasari

et al., 2019). One of these results explains that the role of a leader in improving employee

performance is not only internally adjusting to the situation but also in dealing with various

situations outside the organization.

In addition, several previous studies have also been carried out related to the relationship

between organizational culture and employee performance which shows a significant positive

influence. Organizational culture in this case is interpreted as mutual agreement among

members in improving performance, especially through the involvement of members. But

METHOD

This research uses quantitative methods with an explanatory research approach. This study

analyzes and explains the relationship between situational leadership, organizational culture,

and compensation in improving employee performance.

The Influence of Situational Leadership and Organizational Culture Moderated by Compensation on

1199 Interdisciplinary Social Studies, 1(9), Jun 2022

This study uses the Structural Equation Model (SEM) analysis method with the Variance

Based SEM approach or better known as Partial Least Square (SEM-PLS). This research uses

Branch in November 2021. The population in this study was non-outlet employees, namely

employees of the Palu Branch of PT Midi Utama Indonesia Tbk office whose number was

known (finite population), namely 108 employees (HRD Department, 2021). the sampling

technique used in this study was saturated sampling or known as the census method. So it can

be concluded, the sample in this study was 108 employees consisting of 92 male employees

and 16 female employees. These employees were both a sample and a respondent in this study.

The data collection techniques used in this study are surveys and documentation.

The primary data in this study are data related to situational leadership variables,

organizational culture, compensation and employee performance obtained directly from

respondents through filling out questionnaires. Meanwhile, the secondary data used in this

(SEM) analysis that can simultaneously test the quantifying model as well as test the structural

model.

RESULTS AND DISCUSSION

To find out the relationship between variables in this study, it can be seen from the

significance of the estimated parameters. The statistical test for hypothesis testing is with t-test.

The t-table value for 5% alpha is 1.96. So that the criterion of acceptance of the hypothesis is

when the t-statistic > the t-table (t-statistic > 1.96) . T-statistical testing (Sholihin & Ratmono,

2020) in the PLS is carried out by the resampling method, which can also minimize the

abnormality of the research data. Table 1 shows the results of resampling the direct influence

The Influence of Situational Leadership and Organizational Culture Moderated by Compensation on

1200 Interdisciplinary Social Studies, 1(9), Jun 2022

R

2

= 0.55

𝜷 = 𝟎. 𝟏𝟐

Organizational

Culture (X2)

Table 1. Hypothesis Testing of Direct Influence

Table 2. Hypothesis Testing of the Influence of Moderation (Interaction Effect)

Based on the test results in the table above, the results of testing the hypothesis of direct

influence and influence of moderation (interaction effect) can be illustrated through the

research model shown in figure 5.1 as follows:

The Influence of Situational Leadership and Organizational Culture Moderated by Compensation on

1201 Interdisciplinary Social Studies, 1(9), Jun 2022

situational leadership variable (X1) has an insignificant positive influence on the employee

performance variable (Y). This result makes it clear that the better the implementation of

The hypothesis of the influence between organizational culture variables (X2) on

employee performance (Y) obtained a path coefficient of 0.532 with a t-statistical value of

6,400 (t > 1,960) or p-value < 0.001 (p < 0.05) so that the organizational culture variable (X2)

has a positive and significant influence on employee performance variables (Y) meaning that

the better the organizational culture applied to the company, the better the employee

performance will increase properly. Thus it can be concluded that the second hypothesis (H2)

is accepted.

H3: There is a Positive and Significant Interaction between Compensation and

Situational Leadership in Influencing Employee Performance

leadership relationship will be in improving employee performance, but in this case the

increase in employee performance is on a low scale of improvement. Thus it can be concluded

that the third hypothesis (H3) is rejected.

H4: There is a Positive and Significant Interaction between Compensation and

Organizational Culture in Influencing Employee Performance

The hypothesis of the influence between the compensation moderation variable (Z) on

organizational culture (X2) on employee performance (Y) obtained a path coefficient of 0.228

with a t-statistical value of 2.518 (t > 1.960) or p-value 0.007 (p < 0.05) so that the interaction

between the compensation moderation variable and organizational culture has a positive and

Based on the results of the analysis, it is known that situational leadership has a positive

and insignificant influence on the performance of employees. This result proves that there is a

weak relationship between the two variables with a positive correlation. This fact shows that

The Influence of Situational Leadership and Organizational Culture Moderated by Compensation on

1202 Interdisciplinary Social Studies, 1(9), Jun 2022

the application of situational leadership in PT. PT. Midi Utama Indonesia Tbk. Palu Branch

has not been optimal in facilitating the improvement of employee performance.

is followed by increasing the number of two-way communication and supportive behavior by

trying to hear followers' feelings about the decisions made and respect their ideas and

suggestions (Hersey and Blanchard, 1982).

However, the application of situational leadership is not strong enough in improving

employee performance optimally in this company. The strategy becomes only one of the parts

needed by employees in achieving the goals of the company, in this case the existence of

consultation in solving problems. Meanwhile, a successful leader is a leader who can adapt the

leadership style to the needs of the situation. Stoner et al. (1996) explains that leaders will best

contribute to the achievement of organizational goals that have different or varied situations

and environments. In line with this opinion, Azizah et al. (2017) revealed that the role of a

The results of this study are in line with the results of research conducted by Azizah et al.

(2017) , Hartono (2018), Purnamasari et al. (2019) which finds the presence of a weak influence

between situational leadership on employee performance. Empirically, Purnamasari et al.

(2019) explained that the behavior of leaders who only conduct discussions in carrying out

tasks does not necessarily support employee performance optimally if it is not followed by the

provision of responsibilities, for example giving up supervision of the implementation of duties

to employees. Furthermore, the results of this study support Chen and Silverthorne's research

(2005) which shows that SLT (Situation Leadership Theory) has no relationship to employee

performance. SLT explains that the leader's behavior will be effective depending on the level

of readiness of the leader in trying to influence others. This suggests that high-value leadership

implementation of a good organizational culture will cause employee performance to increase

optimally. This means that if the variables of organizational culture are of high value, it will

have an impact on the high level of employee performance. This includes the statement item

that has the highest score on the organizational culture variable in this study, namely "This

The Influence of Situational Leadership and Organizational Culture Moderated by Compensation on

1203 Interdisciplinary Social Studies, 1(9), Jun 2022

company develops human resources through teamwork". The item represents clan culture.

Furthermore, with the implementation of a structured clan culture, the performance of

and commitment in the form of teamwork, participation and consensus is well received and

implemented by employees. It encourages employees to achieve the goals and values of the

organization. In such a culture, the employees feel like a family or group that has a strong

emotional bond. In parallel, this culture values communication, mutual knowledge sharing,

loyalty and maintaining relationships between employees, customers and suppliers (Cameron

& Quinn, 1999). Meanwhile, McShane and Glinow (2018) argue that a strong organizational

culture has the potential to improve performance, and conversely, if the organizational culture

is weak, it results in decreased performance. Thus, organizational culture will create stronger

teamwork and encourage involvement in achieving goals so as to improve employee

performance in achieving company goals (Pawirosumarto et al., 2017).

employees to establish good relationships with each other between employees in carrying out

work in order to achieve company goals. This allows for the creation of strong collaboration

or teamwork. Furthermore, Pujiono et al. (2020) explains that a well-developed organizational

culture influences employee behavior and encourages employees to perform higher.

The Role of Compensation as Moderation in Situational Leadership to Employee

Performance

Based on the results of the analysis of moderation tests using the type of continuous

moderation relationship (Continuous moderating effect), it is known that compensation as a

moderation variable has an insignificant influence in strengthening situational leadership

Theabove h asil shows that employees feel comfortable in working at the company PT

Midi Utama Indonesia Tbk. Palu Branch, but this comfort is not enough to strengthen the

influence of situational leadership on improving employee performance. Furthermore, another

fact explains that indirect financial compensation in the statement item "Provision of benefits

The Influence of Situational Leadership and Organizational Culture Moderated by Compensation on

1204 Interdisciplinary Social Studies, 1(9), Jun 2022

in the workplace in accordance with the performance provided", has the lowest average value

perceived by employees compared to direct financial compensation as well as non-financial

assessment, with such a good assessment the hope is that it will result in organizational awards

such as bonuses, and increased employee benefits or promotions and in the end this award will

satisfy personal goals of employees. Furthermore, the non-financial compensation in this case

received by the employees is in accordance with the expectations of the employees even though

in the future it still needs to be maximized, for example by providing appropriate holidays or

leave.

Thus, the provision of adequate compensation is indispensable because once the employee

is satisfied with the compensation offered, their motivation rises to a higher level, followed by

an improvement in their performance (Handoko, 2008). The results of this study are in line

with the results of a study conducted by Riyadi (2011), which showed that compensation did

the amount of compensation given is also a cause for employees to feel dissatisfied, this is

supported by the results of Leonardo and Andreani's research (2015) which shows that there

is a more dominant relationship between financial compensation than non-fianance

compensation to improving employee performance.

The Role of Compensation as Moderation in Organizational Culture towards Employee

Performance

Based on the results of the analysis of the moderation test using the type of continuous

moderation relationship (Continuous moderating effect) it was found that compensation as a

moderation variable has a positive and significant influence on the influence of organizational

comfortable at work". The item represents the feasibility of the facility as one of the indicators

of non-financial compensation (Simamora, 2006). The result shows that employees feel

comfortable in working at the company PT Midi Utama Indonesia Tbk. Palu Branch, this

comfort helps employees to work together by upholding collaborativeity in completing work.