The Influence of Work Engagement and Compensation Fairness on Employee Performance: The Mediating Role of Leadership Style

Fahmi Sulaiman; Jihan Sulaiman; Agustalinda Nora; Kriten Tumpal Hamonangan Siahaan; Nilawati Nilawati

doi:10.33059/jensi.v10i1.15156

Fahmi Sulaiman Sekolah Tinggi Ilmu Manajemen Sukma
Jihan Sulaiman Universitas Sriwijaya
Agustalinda Nora Universitas Graha Nusantara
Kriten Tumpal Hamonangan Siahaan universitas islam sumatera utara
Nilawati Nilawati universitas islam sumatera utara

DOI: https://doi.org/10.33059/jensi.v10i1.15156

Keywords: Work Engagement, Compensation Fairness, Leadership Style, Employee Performance, Higher Edication Institutions

Abstract

Employee performance is a critical concern in higher education institutions, particularly private universities facing increasing competition, accreditation demands, and human resource challenges. This study examines the effects of work engagement and compensation justice on employee performance, with leadership style as a mediating variable. The study is grounded in Job Demands–Resources (JD-R) Theory, Equity Theory, and Social Exchange Theory, which explain how organizational resources, fairness, and leadership practices influence employee attitudes and performance. A quantitative survey was conducted among academic and administrative staff at four private higher education institutions in Medan, Indonesia: STIM Sukma, Universitas Islam Sumatera Utara, Universitas Graha Nusantara, and Universitas Senior Medan. Data were analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS) to test the proposed relationships and mediation effects. The results show that work engagement and compensation justice positively and significantly affect employee performance. Both variables also significantly influence leadership style, while leadership style positively and significantly affects employee performance. Furthermore, leadership style partially mediates the relationships between work engagement and employee performance and between compensation justice and employee performance. The findings highlight the importance of effective leadership, employee engagement, and fair compensation in improving performance in private higher education institutions.

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