The Influence of Transformational Leadership and Compensation on Sustainable Employee Performance Mediated by Work Motivation (Study of Pt. Sumber Indah Lestari)

Abstract

This study aims to examine and analyze the influence of transformational leadership and compensation on sustainable employee performance, with work motivation serv-ing as a mediating variable, in the context of PT. Sumber Indah Lestari. A quantita-tive approach was employed using Structural Equation Modeling–Partial Least Square (SEM-PLS) as the analytical method. Data were gathered through question-naires distributed to 150 store leaders (firstmen) who participated as respondents. The findings indicate that transformational leadership has a positive and significant impact on work motivation and directly affects sustainable employee performance. Compensation also demonstrates a significant influence on work motivation, but does not have a direct significant effect on sustainable performance. However, work motivation is proven to significantly mediate the relationship between both trans-formational leadership and compensation with sustainable employee performance. These results highlight the importance of inspirational, supportive, and visionary leadership, reinforced by a fair and transparent compensation system that aligns with employee contributions. The managerial implications of this research empha-size the need to strengthen transformational leadership practices at the operational level and to review and improve compensation systems to better motivate employees and enhance long-term productivity. Furthermore, this study contributes to the theo-retical development of sustainable employee performance, particularly in the mod-ern retail sector in Indonesia, by integrating motivation as a key mediating factor in organizational performance strategies.