The Influence Of Transformational Leadership And Compensation On Employee Turnover Intentions (Study On Karywan HR Section PT Bank Rakyat Indonesia Branch Office Medan)

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The Influence of Transformational Leadership and Compensation on Employee Turnover Intentions: A Study on Karywan HR Section PT Bank Rakyat Indonesia Branch Office Medan

Introduction

Employee turnover intention refers to the tendency of employees to leave a company, and a high level of turnover can have a negative impact on the organization. In this context, fair transformational leadership and compensation are an important factor in reducing the level of turnover. The application of good leadership and appropriate compensation can reduce the desire of employees to leave the company. This study aims to analyze the effect of transformational leadership and compensation on turnover intention among employees of the Human Resources (HR) section at PT Bank Rakyat Indonesia, Medan Branch Office.

Background of the Study

Employee turnover is a significant concern for organizations, as it can lead to a loss of skilled employees, increased recruitment and training costs, and decreased productivity. In the banking industry, employee turnover can have a particularly negative impact, as it can lead to a loss of customer trust and loyalty. Therefore, it is essential for organizations to understand the factors that influence employee turnover intention and to develop strategies to reduce it.

Methodology

This study used a quantitative approach with an association method to analyze the effect of transformational leadership and compensation on turnover intention. The population consisted of 40 HR employees at PT Bank Rakyat Indonesia, with a sample taken using the Purposive Sampling method, producing 38 respondents based on the Isaac and Michael formula. Data collection was carried out in two ways: Primary data obtained through the distribution of questionnaires and secondary data through a literature review.

Results

The results of this study showed that the transformational leadership variable had no significant influence on turnover intention, while compensation showed a significant effect. Both variables, namely transformational leadership and compensation, have a significant influence on turnover intention. The coefficient obtained shows a strong relationship between transformational leadership, compensation, and turnover intention, with a R value of 0.671 or 67.1%. The Adjusted R Square value shows that the transformational leadership and compensation variables can explain 41.9% of the turnover intention variable, while the remaining 48.1% are influenced by other variables that are not explained in this study.

Discussion

The results of this study indicate that although transformational leadership does not directly affect the desire of employees to leave the company, it is still important to be considered as part of organizational management. Transformational leadership can help create a work environment that supports, motivates, and empowers employees, although it is not directly related to the decision to survive in the company.

On the other hand, compensation is proven to be a very important factor in maintaining employees. Employees who feel they get rewards that are in accordance with their contributions tend to be more loyal and have high motivation to continue working in the company. This shows that companies need to consider adjustments and improvements in their compensation systems to reduce turnover intention.

Conclusion

The results of this study provide valuable insights for the management of PT Bank Rakyat Indonesia and other companies in formulating more effective human resource management strategies. Optimizing transformational leadership and improving compensation systems is a strategic step that can be taken to reduce turnover intention and increase employee loyalty. The study also highlights the importance of considering external factors that may influence employee turnover intention, such as competitive job market conditions, work culture outside the organization, and the level of employee satisfaction in general.

Recommendations

Based on the findings of this study, the following recommendations are made:

  1. Optimize transformational leadership: Organizations should focus on developing transformational leadership skills among their managers and leaders to create a work environment that supports, motivates, and empowers employees.
  2. Improve compensation systems: Organizations should review and improve their compensation systems to ensure that employees feel they get rewards that are in accordance with their contributions.
  3. Consider external factors: Organizations should consider external factors that may influence employee turnover intention, such as competitive job market conditions, work culture outside the organization, and the level of employee satisfaction in general.

Limitations of the Study

This study has several limitations, including:

  1. Sample size: The sample size of this study was relatively small, which may limit the generalizability of the findings.
  2. Data collection method: The data collection method used in this study was based on self-reported data, which may be subject to biases and limitations.
  3. External factors: The study did not consider external factors that may influence employee turnover intention, such as competitive job market conditions, work culture outside the organization, and the level of employee satisfaction in general.

Future Research Directions

Future research should aim to:

  1. Investigate the impact of external factors: Future research should investigate the impact of external factors, such as competitive job market conditions, work culture outside the organization, and the level of employee satisfaction in general, on employee turnover intention.
  2. Develop a more comprehensive model: Future research should develop a more comprehensive model that includes multiple variables and factors that influence employee turnover intention.
  3. Use a larger sample size: Future research should use a larger sample size to increase the generalizability of the findings.
    Frequently Asked Questions (FAQs) about the Influence of Transformational Leadership and Compensation on Employee Turnover Intentions

Q: What is transformational leadership, and how does it affect employee turnover intention?

A: Transformational leadership is a style of leadership that inspires and motivates employees to achieve a common goal. It involves creating a work environment that supports, motivates, and empowers employees. While this study found that transformational leadership does not directly affect employee turnover intention, it is still an important factor in organizational management.

Q: What is the relationship between compensation and employee turnover intention?

A: This study found that compensation is a significant factor in maintaining employees. Employees who feel they get rewards that are in accordance with their contributions tend to be more loyal and have high motivation to continue working in the company.

Q: What are some strategies that organizations can use to reduce employee turnover intention?

A: Based on the findings of this study, organizations can use the following strategies to reduce employee turnover intention:

  1. Optimize transformational leadership: Organizations should focus on developing transformational leadership skills among their managers and leaders to create a work environment that supports, motivates, and empowers employees.
  2. Improve compensation systems: Organizations should review and improve their compensation systems to ensure that employees feel they get rewards that are in accordance with their contributions.
  3. Consider external factors: Organizations should consider external factors that may influence employee turnover intention, such as competitive job market conditions, work culture outside the organization, and the level of employee satisfaction in general.

Q: What are some limitations of this study?

A: This study has several limitations, including:

  1. Sample size: The sample size of this study was relatively small, which may limit the generalizability of the findings.
  2. Data collection method: The data collection method used in this study was based on self-reported data, which may be subject to biases and limitations.
  3. External factors: The study did not consider external factors that may influence employee turnover intention, such as competitive job market conditions, work culture outside the organization, and the level of employee satisfaction in general.

Q: What are some future research directions?

A: Future research should aim to:

  1. Investigate the impact of external factors: Future research should investigate the impact of external factors, such as competitive job market conditions, work culture outside the organization, and the level of employee satisfaction in general, on employee turnover intention.
  2. Develop a more comprehensive model: Future research should develop a more comprehensive model that includes multiple variables and factors that influence employee turnover intention.
  3. Use a larger sample size: Future research should use a larger sample size to increase the generalizability of the findings.

Q: What are some practical implications of this study?

A: The findings of this study have several practical implications for organizations, including:

  1. Investing in transformational leadership development: Organizations should invest in developing transformational leadership skills among their managers and leaders.
  2. Reviewing and improving compensation systems: Organizations should review and improve their compensation systems to ensure that employees feel they get rewards that are in accordance with their contributions.
  3. Considering external factors: Organizations should consider external factors that may influence employee turnover intention, such as competitive job market conditions, work culture outside the organization, and the level of employee satisfaction in general.

Q: What are some future applications of this study?

A: The findings of this study can be applied in various contexts, including:

  1. Human resource management: The study's findings can be used to inform human resource management practices, such as recruitment, selection, and training.
  2. Organizational development: The study's findings can be used to inform organizational development initiatives, such as leadership development and change management.
  3. Research and academia: The study's findings can be used to inform future research and academic studies on employee turnover intention and related topics.