The Influence of Transformational Leadership on Job Satisfaction, Organizational Commitment, and Employee Performance

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Marnis Atmojo / The Influence of Transformational Leadership on Job Satisfaction, Organizational Commitment, and Employee Performance / 113 - 128
This research has four main objectives; first, to prove and analyze the
influence of transformational leadership towards employee job satis-
faction; Second, to prove and analyze the influence of transformational
leadership towards organizational commitment; Third, to prove and
analyze the influence of transformational leadership towards employee
performance; Fourth, to prove and analyze the influence of organiza-
tion commitment towards the employee performance. This research
involved 146 members of middle management as our research sample
namely Head of Department, Plantation Manager, Plant Manager,
Head of Bureau/Division, Head Assistant, Head of Strategic Business
Unit (SBU), Chief Engineer and Head of Hospital Service. Structural
Equation Modeling (SEM) was used to test and analyze relationship
among the research variables. Research findings are transformational
leadership significantly influences job satisfaction, transformational
leadership significantly influences the organization commitment. The
job satisfaction is shown to have significant influence on employee
performance, and organization commitment significantly influences
the employee performance..
© 2012 IRJBS, All rights reserved.
Received: January 25, 2012
Final revision: June 12, 2012
Keywords:
Transformational Leadership,
Job Satisfaction,
Organizational Commitment,
Employee Performance
Corresponding author:
[e-mail]
Marnis Atmojo
Universitas Riau, Riau
A R T I C L E I N F O A B S T R A C T
S
tate-owned enterprise (BUMN), is one
of the important business players that
largely contributes to national development,
aimed at developing people prosperity. Highly
valuable state-owned enterprise (BUMN) requires
professionalism in its management for a well
run enterprise, without creating burden to the
government.
PT Perkebunan Nusantara V Riau (PTPN V) is one of
the state-owned plantation enterprises in Indonesia.
It is a consolidation of ex- PT Perkebunan II, PT Per-
Vol. 5 | No. 2
ISSN: 2089-6271
The Influence of Transformational Leadership
on Job Satisfaction, Organizational
Commitment, and Employee Performance

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Marnis Atmojo / The Influence of Transformational Leadership on Job Satisfaction, Organizational Commitment, and Employee Performance / 113 - 128International Research Journal of Business Studies vol. V no. 02 (2012)
kebunan IV and PT Perkebunan V in Riau Province.
PTPN V manages palm, rubber and cocoa cultiva-
tion. However, since 2001, the company has been
focusing only on the palm and rubber cultivation.
The total number of employees, total production
and employee productivity of PTPN V, Riau are
shown in Table 1.
It is evident from Table 1 that employee produc-
tivity in 2006 was 16.78% lower than that of 2005.
This is related to declining employee performance
which later decreases the production output. One
of the possible causes is the change in organiza-
tional structure due to a merger of three PTPN
companies to become a single PTPN V entity,
which then results in alteration of organizational
leadership. Leadership strongly influences com-
pany’s overall performance. In 2007, productivity
showed a positive trend with the increase of 7.67
% compared to that of previous year. A minute
increase in productivity of 1.31% occured in 2008.
While in 2009, employee productivity plummeted
by 11.30%, affecting the company’s profit achie-
vement. This situation clearly indicates declining
PTPN V employee’s performance. The downtrend
is possibly related to the merger adaptation pro-
cess to several different leadership characteristics
as a result of government consolidation program.
State-owned plantation enterprise follows a
beurocratic management style which possibly be
adopted from the government beurocracy. To date,
several state-owned plantation enterprises have
transformed to real corporations shedding their
beurocratic patterns. The transformation from
“bureaucracy” to “corporation” remains the main
agenda of state-owned plantation enterprises.
Furthermore, inspite of the state-owned planta-
tion’s organizational structure that support decen-
tralized authority, the bureaucracy issue exists due
on the ineffectiveness of authority delegation as a
result of paternalistic culture.
Paternalism is different from leadership. While
leadershipis the process of influencing others to
achieve organizational benefits, paternalism is
identical to superiority. Paternalism is a value sys-
tem with absolute dependence to the leader. In
paternalistic organization, the member of organi-
zation assumes that the authority and accountabi-
lity relies on the leader. Therefore, the responsi-
bility of organizational development relies prima-
rily on the leader. In paternalistic organization, the
application of modern management principles
which is based on Good Corporate Governance
where professionalism becomes the attributes of
all members of organization can be difficult.
Leadership plays a key role in company restruc-
turization especially in plantation business. The
majority of state-owned plantation company
requires corporate restructuring for profitization
and/or privatization. According to theories and
prior experiences, in a declining organization per-
Year Total employees
(person)
Total Production
(Tons)
Productivity
per Person
Employed
Increase/Decrease
in Productivity (%)
2005 16,204 2,092,097 129.11
2006 16,073 1,726,920 107.44 -16.78
2007 16,130 1,865,936 115.68 7.67
2008 16,614 1,896,745 114.17 1.31
2009 15,581 1,567,266 100.59 -11.30
Table 1. Total Employees, Total Production dan Employee Productivity of PTPN V Riau
in 2005-2009
Reference: PTPN V Riau (2010)
formance, restructurization process is more likely
to succeed when originated from the leader. This
is also relevant to the state-owned plantation com-
pany. Considering theneed of restructurization, it
is necessary for the state-owned plantation com-
panies to have leaders with advanced leadership
quality (Nugroho, 2005). Without leader’s sincerity
to execute policies for the common good, it will
be difficult to revitalize the state-owned plantation
performance (BUMN Track, 2008).
In the effort to achieve its best performance, the
Board of Directors of PTPN V Riau has made a
great effort to achieve a significant breakthrough,
as an example, through building corporate vision
to be a “World Class Company”(BUMN Track,
2008).
The implementation of this corporate vision
supported with strong leadership enabling changes
in every aspect of the organization, which is known
as transformational leadership. Transformational
leadership articulates a vision of the future of the
organization realistically, stimulates subordinates
intellectually, and gives personal attention to
diversity in the subordinate level.
According to Bass danAvolio (2003), transforma-
tional leadership is a change-orinted-leadership,
where organization vision is not only formulated
but also implemented through; first, idealized
influence, where leader through his/her personal
autonomy extraordinarily influences his/her subor-
dinate. Second, inspirational motivation, the ability
of leader to emotionally inspire, motivate, cheer,
festive dan even praise his/her subordinates.
Third, individualized consideration, the ability and
responsibility of leaders to provide satisfaction and
encourage subordinate’s productivity. The leader
tends to be friendly, informal, close to the subordi-
nates, treat the suborndinates equally, provide ad-
vice, help and support for individual development.
Fourth, intellectual stimulation reflectsthe ability
of leaders to stimulate the subordinates intellec-
tually through motivation.
Several influences of transformational leadership
towards research variables are analyzed in
this study. The first influence investigated is
transformational leadership and job satisfaction.
Transformational leadership is leadership that
nurtures the need of personal development of
followers, stimulates and inspires them to offer
their best effort in reaching organizational goals.
A relationship between employee satisfaction
and work aspect is noted, Robbins (2006),
demonstrates that job satisfaction is a pleasurable
or positive emotional state resulting from the
appraisal of one’s job and perception of one’s work
quality with regard to its valuable contributions.
Factors that contribute to employee satisfaction
include: activities, compensation, independence,
reward, social status, and social services.
Job satisfaction is subjective in nature, where
each individual experiences different level of
job satisfaction. The more job aspects match
individual’s desire, the higher job satisfaction, and
vice versa.
Accroding to Luthans (2005), there are three job
satisfaction dimensions; first, job satisfaction is an
emotional response towards job situation. Hence,
job sastisfaction can be visualized and predicted.
Second, job satisfaction is often determined
by how well outcomes meet and exceed the
expectations. Third, job satisfaction represents
several related attitudes.
Dorman dan Zapf (2001), explains that there
are two factors that influence job satisfaction,
personnel and organizational factors. Personnel
factor involves personality aspects, status, seniority,
job match dan life satisfaction. On the other hand,
organizational factor involves reward system,
centralized authority, acceptance of supervisor,
social and job reward as well as work environment.
Job satisfaction is subjective in nature, where
each individual experiences different level of job
satisfaction. The more job aspects match one’s

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Marnis Atmojo / The Influence of Transformational Leadership on Job Satisfaction, Organizational Commitment, and Employee Performance / 113 - 128International Research Journal of Business Studies vol. V no. 02 (2012)
desire, the higher job satisfaction, and vice versa.
Tondok dan Andarika (2004) stated that
transformational leadership gives a positive and
significant influence towards job satisfaction. This
is contrary to research finding by Sudarmasto
(2005), which suggested that transformational
leadership does not significantly influence job
satisfaction.
Secondly, in order to understand the influence
of transformational leadership towards organiza-
tional commitment, one should note that trans-
formational leader should possess the ability to
articulate and align his/her vision to the subordi-
nates, elevate those around them from a lower to
a higher level of need. A vision should be trans-
mitted through persuasion and inspiration, not by
decision and directive statement. Effective leaders
use a combination of captivating rethoric, meta-
phors, slogan, symbols and rituals. Commitment
to the vision is strongly related to followers trust in
their leader.
Oganizational commitment is defined as “The
degree to which on employee identifies with a
particular organization and its goals, and wishes
to maintain membership in the organization”, in
which elements of organizational commitment
are: affective, normative and and rational (Rob-
bins, 2006).
Affective commitment is originated from em-
ployee’s emotional attachment to the organiza-
tion. Employees with strong affective commitment
will identify themselves through active participa-
tion and enjoying his/her involvement within the
organization. Employees with high normative
commitment will stay in the organization because
they ought to do so. Rational commitment is rela-
ted to commitment based on perception on the
cost the employee associated with leaving the or-
ganization. In other words, employee with strong
rational commitment will stay in the organization
because they need to.
Commitment can be formed at the very beginning
when individual initially joins as a member of
organization, through well-developed socialization
and orientation program. Employee understanding
on company details, vision and mission through
socialization and orientation program will hasten
the unification of employee as an individual within
the organization. Commitment directs individual
to work according to the company expectation
and individual expectation, which encourages
better work performance (Luthans, 2005).
Tobing (2009) demonstrates that transformational
leadership significantly influences organizational
commitment. This research finding is further
confirmed by Fortmann et al. (2003) who states
that transformational leadership has a significant
influence towards organizational commitment.
Basically, a leader should create organizational
commitment to the follower by creating follower’s
trust. Trust not only depends on the leader’s
expertise, but also the leader’s consistency in
statements and attitudes.
Third, the next relationship analyzed is the influence
of job satisfaction towards employee performance.
One will tend to work passionately when job
satisfaction is attained. This job satisfaction is the
key for morality, discipline, employee performance
in supporting company objectives. High employee
satisfaction creates company/organization loyalty
which later improves employee performance.
Employee performanceis defined as results
obtained fromjob functions or activities performed
as behaviour and results (Amstrongdan Baron,
2005). Evaluation towards employee performance
can be assessed by several parties involved and by
a representative evaluator. Robbins (2001) states
that usually the best work evaluation is to be done
by employee’s direct supervisor. This is related
to the fact that direct supervisor is the person
responsible for his/her subordinate’s performance
for comprehensive evaluation.
Robbins (2001) also suggests that recently not
all direct supervisor can directly observe subor-
dinate’s performance because of newly imple-
mented performance system, such as independent
team creation, distant work method which creates
gap between the supervisor and the subordinates.
Study conducted by Sudarmasto (2005) demons-
trates that besides evaluator’s factor, method used
in performance evaluation should be well suited,
to give respresentative results. There are five
methods of individual performance evaluation.
Mathis dan Jackson (2002), states that, employee
performance in the context of productivity de-
pends on three major factors; First, innate ability
to accomplish task which consist of talent, inte-
rest, personality factor, and psychological factor.
Second, employee effort level which includes mo-
tivation, work ethics, work attendance and work
planning. Third, support provided to the work
force such as training, tools, known expectation
and productive work colleagues.
The above statements are in line with Lussierda-
nAnchua (2001), which suggests that performance
is a function of ability, job satisfaction, motivation
and resources. Therefore, in order to increase per-
formance, appropriate actions are required accor-
ding to the causative factor.
Andrew (2004) finds that job satisfaction signifi-
cantly influences tennis player’s performance. This
finding is supported with study done by Tobing
(2009) which argues that job satisfaction signifi-
cantly influences employee performance. In short,
the higher the job satisfaction results in higher the
employee performance.
Lastly, influence of organizational commitment
on employee’s performance is analyzed in this
study. Commitment can initially be built at the
initial point of contact of member within the
organization, through well-developed socialization
and orientation program. Employee understanding
on company details, vision and mission, through
socialization and orientation program accelerate
the unification of employee as an individual within
the organization. Commitment directs individual
to work according to the company expectation
and individual expectation, which provokes better
work performance (Luthans, 2005).
Prior research argues that organizational com-
mitment is related to performance (Carmeli and
Freund, 2004). Research done by Andrew (2004)
involving the collection of samples from em-
ployees working in manufacturing and service
companies, hypothesizes that organizational com-
mitment is related to performance.
Based on above explanations in the context of the
transformational leadership model, employee job
satisfaction, organizational commitment and em-
ployee’s performance, there are several reasons
this research conducts which are; First, transfor-
mational leadership variable, employee job satis-
faction, organizational commitment, employee
performance are crucial elements for the success
of organizations and its employee, hence requiring
in depth research. Second, results inconsistency in
previous study with regard to relationship of trans-
formational leadership and performance was no-
ted. Hence, different research model need to be
proposed for further investigation. Third, accor-
ding to several theoreticalreviews and researches,
transformational approach in leadership model is
highly relevant to organization facing global com-
petition with major uncertainties and challenges.
The purposes of this research are; First, to prove
and analyze the influence of transformational
leadership towards employee job satisfaction;
Second, to prove and analyze the influence of
transformational leadership towards organizational
commitment; Third, to prove and analyze influence
of transformational leadership towards employee
performance; Fourth, to prove and analyze the
influence of organization commitment towards
employee performance.