The Role of Compensation in Mediating the Relationship Between Transformational Leadership and Job Satisfaction
Evidence from Indonesian Private Universities
DOI:
https://doi.org/10.33096/jmb.v13i2.1650Keywords:
Compensation, Job satisfaction, Transformational leadershipAbstract
This study aims to examine the mediating role of compensation in the relationship between transformational leadership and job satisfaction within the context of private universities in Indonesia. A quantitative approach was employed using a cross-sectional survey design, with data collected from academic and administrative staff. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that transformational leadership has a significant positive effect on job satisfaction and compensation. Compensation is also found to significantly influence job satisfaction. Furthermore, the findings reveal that compensation partially mediates the relationship between transformational leadership and job satisfaction, suggesting that leadership influences employee satisfaction both directly and indirectly through reward systems. This study contributes to the literature by extending transformational leadership research through the inclusion of compensation as a mediating variable, particularly in the higher education context. Theoretically, this study makes a novel contribution by positioning compensation as a structural HRM mechanism rather than a psychological mediator through which transformational leadership shapes employee job satisfaction, an approach not previously examined in the higher education context. Practically, the findings suggest that university management should align leadership practices with fair and effective compensation systems to enhance employee satisfaction and organizational performance.
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