How Authentic Leadership Promotes Job Performance? The Mediating Role of Organizational Climate

How Authentic Leadership Promotes Job Performance? The Mediating Role of Organizational Climate

Tetra Hidayati* Zainal Ilmi Jati Kasuma

Department of Management, Faculty of Economics and Business, Mulawarman University, Samarinda 75119, Indonesia

Faculty of Business and Management, Universiti Teknologi Mara (Sarawak branch), Sarawak 94300, Malaysia

Corresponding Author Email: 
tetra.hidayati@feb.unmul.ac.id
Page: 
1431-1440
|
DOI: 
https://doi.org/10.18280/ijsdp.170507
Received: 
10 April 2022
|
Revised: 
26 July 2022
|
Accepted: 
3 August 2022
|
Available online: 
31 August 2022
| Citation

© 2022 IIETA. This article is published by IIETA and is licensed under the CC BY 4.0 license (http://creativecommons.org/licenses/by/4.0/).

OPEN ACCESS

Abstract: 

Industrial progress continues to demand workspace professionalism, so it encouraged the labor market to be competitive. High enthusiasm is one signal that reflects work productivity. This work orientation is to investigate the relationship between authentic leadership and job performance mediated by organizational climate. The sample method collects the entire population, which is focused on 159 employees who work at PT. Pure Original Plywood (Kalamur) in Samarinda City. The analytical approach was tested using Partial Least Square (PLS). The empirical findings validate that authentic leadership plays an important role in building organizational climate. Meanwhile, improvement in organizational climate also has a significant effect on work performance. Interestingly, authentic leadership does not have a significant effect on job performance, but through the application of organizational climate, the effect is significant. Further implications focus on organizational climate, where the key to success in stimulating job performance is emphasizing rewarding according to their achievements. In practice, this paper also verifies that an excellent organizational climate as a concrete condition creates authentic leadership.

Keywords: 

employee resources, manufacturing company, PLS, Samarinda

1. Introduction

Overall, company performance highly depends on job performance [1]. Therefore, employees become the backbone of an organization in order to generate large profits. Organizational performance is also vital for management and organization, so it is hoped that it will encourage employee performance. Employee performance is the focus, so that the company’s business continues to grow [2]. When planning, monitoring and evaluation aspects are integrated with each other, it will align them with the organization’s strategy, where the final output is employee performance.

Over the last few decades, the element of leadership has become the backbone to determine the existence of the organization. The prosperity of an organization is closely related to employees. The role of the leader is always highlighted, because this is the key to selecting employees who contribute well to the company’s values. Without ignoring the dimensions of leadership. Position is a transmission that is a common part of organizational performance [3]. The organization will work hard to ensure that a leader can support employee performance.

Leadership transactions often lead to new opportunities that are authentic or known as ‘authentic leadership’ [4]. They orient this leadership character to help organizational performance [5]. However, in reality, employees actually do not prioritize the company [6]. They cannot express their performance, as required by the company. This becomes a dilemma which leads to the target not running optimally.

The presence of a global pandemic (such as COVID-19), reduces the slowdown in company growth in all fields. This situation requires them to try their best to maintain the viability of the company [7, 8]. Apart from highlighting the essence of productivity, they are also asked to pay attention to the virus transmission prevention procedures through strict health protocol policies. Although the realization of the company’s activities was hampered, performing the employees remains the main thing.

The journey of the organizational climate can run smoothly even though it is hit by a pandemic, as long as the routine for paying employee compensation and salaries is uncertain. Indeed, in practice, employees feel uneasy because they must bridging procedures that are far more complicated than the previous normal period [9]. On the one hand, work support equipment is inadequate compared to the number of employees, so that recent problems arise, namely rule violations and the risk of non-compliance, which are often ignored by them.

The basic concepts in understanding authentic leadership and organizational climate were popularized by Calderon-Mafud and Manuel Pando-Moreno [10], Ulfa et al. [11], Wu and Xu [12], Munyaka et al. [13], and Sainz et al. [14]. On the same occasion, an authentic leadership model acts in growing the organizational climate. Even though the era of disruption creates job competition, becoming a shining organization still requires an authentic leadership character. The motive in the psychological capital that is built up in the workplace indirectly strengthens the organizational climate, where leadership standards are at stake. If the two of them do not find a match, then the opportunity for organizational management failure is unavoidable. The logical consequence is also detrimental to the welfare of employees.

This disruption becomes a drastic job that is detrimental to the company. Therefore, they need to change their strategy even though production results are less stable. The significant obstacles that are often faced are regulations, such as changing regulations tightening. In fact, they often disrupt export destination countries due to delays in the delivery of goods, which affects the decline in the company’s cash flow [15]. The company will take steps through changing the work pattern system. For example, it divided the shift work policy into part-time. They must provide concrete solutions so that employees can still work optimally.

Recently, the interaction between authentic leadership and job performance was discussed. From an employee-centered perspective, the organizational chain relies on authentic leadership. With psychosocial mechanisms, it guides workers’ emotions towards the organization. Sequentially, this model draws the attention of workers to increase affective capacity. At the cusp of organizational strategies that facilitate authentic leadership styles to meet the needs of employees, stimulating their satisfaction and long-term alternative solutions [16-18]. Ayça [19] emphasized that, in managerial principles, authentic leadership is positively related to skills and job satisfaction as an effort to influence job performance.

Disappointment, where employees’ freedom to innovate, is still hampered because of the creative element of the leader himself often marked the actual phenomenon of authentic leadership. This condition requires a leader who can bring a more conducive work situation. Company productivity can be well directed if the organizational climate can maintain consistency and control employee performance [20-22].

The reality in PT. Kalamur was cornered on a performance failure, which frustrated management. In the case study, the backwardness of the organization triggers new polemic in building a positive atmosphere. Fundamental essence does not support as long as the reputation of the organization and job performance are always contradictory, then leadership is constantly being tested. Harmonious leadership must bridge the internal crisis between employees and organizational attributes. They need further action on the role of organizational climate in creating authentic leadership and job performance. The contribution of this research produces theoretical and practical ideas on resource management involving employees in the engineering department at PT. Kalamur Samarinda Branch. We summarize the structure of the paper into five points (introduction, theoretical background and hypotheses, methodology and database, results, discussion, and conclusions).

2. Theoretical and Hypotheses

2.1 Authentic leadership – organizational climate

Qureshi & Hassan [23] and Walumbwa et al. [24] claim that the concept of authentic leadership is quite complex and often causes controversy to understand and assess the responsibility that ideally attaches to a leader, where their leadership and ethical roles are highlighted. At least, Huang [25] shows that behavioral patterns in leaders who promote and use the capacity of a positive ethical and psychological climate will bring about big changes. Authentic leadership characteristics will encourage them to compete through self-development, collaboration with followers, revitalizing relational transparency, balancing information processing, and improving the internalization of moral perspectives.

In particular, Tak and Roh [26] reviewed the correlation between authentic leadership and organizational climate. Authentic leadership will emphasize and act as a role model for positive growth elements, so that it also affects employee behavior positively. In addition, it also stimulates them to manage themselves wisely. Climate antecedents will point to a climate-changing intervention to concentrate on leadership. For this reason, the first hypothesis is scenario:

H1: authentic leadership significantly affects organizational climate.

2.2 Authentic leadership – job performance

Efforts to synergize and be responsible for the tasks assigned to each job judge individual success. Then, this becomes the meaning and limitation on the meaning of performance [27]. If employee performance is a measure of organizational productivity, then their track record will describe the organization’s performance complexly. In this phase, the primary determinant of organizational progress is individual work, thus affecting organizational targets [28, 29].

Leadership reflects the contribution to the company’s efforts to achieve goals. Several empirical studies have proven that leadership is successful in reforming organizational and employee goals through mutually designed and agreed regulations [30-32].

These ideal conditions seem to be a formidable task if there is serious negligence, thus requiring a more conducive leadership character. This edition implies authentic leadership that emphasizes the psychological side, such as behavioral patterns in leadership, as a catalyst for self-awareness [33]. This is a wonderful transformation to combine psychological capacities, use a balance of information processing, and transparent relational leadership [34]. It highlighted the second hypothesis as follows:

H2: authentic leadership significantly affects job performance.

2.3 Organizational climate – job performance

As long as management practices control human resources, organizations, and the environment, the organizational climate can describe the atmosphere and assess organizational members [35]. The essence is to stimulate them to behave rationally, so that collectively it will affect performance and motivation. If it is performance that encourages the contribution and desire of organizational employees to improve the organizational climate, then the pressure becomes a comfortable alternative [36]. They will be proud to be members of an organization that connects the organization's sustainability in the future.

H3: organizational climate significantly affects job performance.

2.4 Authentic leadership – organizational climate – job performance

Permatasari and Ratnawati [37] emphasize that in the context of social relations, the work climate can positively encourage employee performance. Although this is not the only priority, the role of managers implies the urgency of an authentic leadership framework that has brought about significant changes. Another publication discussed by Otaghsara and Hamzehzadeh [38] on the psychological aspects of the workplace explored by social cognitive theory. It becomes the foundation of how the philosophy capital in the mechanism that develops authentic leadership and organizational climate that promises to have long-term effects.

Yasmin et al. [39] also illustrates the problem in various companies is the decline in employee performance. To respond to that, the solution is that effectiveness in authentic leadership must be combined with employee performance.

The turning point from that, implementing employee performance is getting more positive. Actually, if the leader of the company has an authentic nature, it will be in sync with the wishes of the employees, including competence, autonomy, and involvement. This suggests that it will channel maximum performance and the completion of work targets [40]. They will try to harmonize the positive emotions of employees. In turn, it also invites a two-way relationship in the quality of values and congruence between leaders and employees [41, 42]. It instructed the fourth hypothesis below:

H4: authentic leadership significantly affects organizational climate and job performance.

2.5 Conceptual framework

Referring to the theoretical lens and the relevance of previous publications, it created the research framework, as shown in Figure 1. We set the variables into 3 (three) structures, including independent variables, dependent variables, and mediator variables [43-45].

Here, authentic leadership acts as an independent variable, while organizational climate expresses the mediator variable. Then, job performance serves as the dependent variable. Explicitly, authentic leadership is symbolized by ‘X’, organizational climate is ‘Y’, and ‘Z’ implies job performance’.

Figure 1. The proposed model

3. Methodology and Database

The study approach emphasizes the explanatory [46], which explains the causality between the realities of authentic leadership, organizational climate, and job performance. It applied metadata through interview techniques with several employees (N=159) techniques at PT. Kalamur (Samarinda) Company in East Kalimantan Province – Indonesia. It manufactured this private company spread across several parts of Indonesia and we only focus on one branch. The feature in data interpretation is a scale with five rating criteria: 5-strongly agree, 4-agree, 3-neutral, 2-disagree, and 1-disagree [47, 48]. The main content of the questionnaire comprises 19 pillars that reflect 3 variables, where authentic leadership has 7 dimensions, 6 dimensions in organizational climate and job performance has 6 dimensions.

Table 1. PLS grading factor

Measurements

Output

Info

Literature

Outer model

(indicator test)

Convergent validity, average variance extracted (AVE), and composite reliability (CR)

The loading factor=0.50 is considered feasible, AVE>0.50, and CR>0.70.

[49, 50]

Inner model

(hypothesis testing)

R2 for endogenous latent variables and parameter coefficients and t-statistics

Obtaining R2=0.67, 0.33, and 0.19 indicates that the model is good, moderate, and weak. The estimated performance for the path relationship with the structural model must be significant according to the bootstrapping procedure.

[51]

We sourced the data orientation from a survey compiled from Google Form. After the questionnaires were distributed, tabulated, and selected, then they were calculated based on the data interpretation process. The analysis scenario focuses on the Partial Least Square (PLS) method, which highlights three parameters: latent variables, indicator variables, and errors in direct measurements [52, 53].

Table 2. The effect size (Q2)

Score

Notation

0.02

Small effect

0.15

Medium effect

0.35

Large effect

Source: [54, 55].

Assumptions for structural equations are planned in terms of causality between various constructs [56]. We illustrate options from the output to package an interpretation for PLS analysis (see Table 1). The Q2 test bridges the contribution of the independent variable to the dependent variable simultaneously. Table 2 is the operationalization of the effect size. In the majority, the advantage of PLS applications is the level of accuracy and is powerful in handling many variables, even though there is multicollinearity between these variables [57]. Besides, data management using SmartPLS software in modern studies is also consistent and actualizes a more holistic scope [58].

4. Results

4.1 Demographic characteristics

The characteristics identified by the demographics of the respondents as much as 100% (N=159) were male because most PT. Kalamur (Samarinda Branch) employed field workers with specific skills and gender specifications. The category of respondents aged 40–50 years occupies the first position reaching 29% (N=46).

Table 3 also exposes the most dominant educational background at the SMA/SMK level, amounting to 88%. Not only that, those who have a working period of 20-30 years are up to 40.1% (N=65). Of the 159 respondents, 87.4% (N=139) of them were married. Key informants are those who work as technical workers from the production and maintenance division in the plywood processing business. Here, the researcher did not interview the management or directors of personnel (HR), finance, marketing, operational, and administration.

4.2 Model evaluation: Outer and inner

The capacity of this research only facilitates three variables: authentic leadership (AL), organizational climate (OC), and job performance (JP). Nineteen indicators describe the three items.

Table 4 reflects the three elements of variables that bridge all dimensions, where AL (X) comprises seven indicators that detect the acquisition of a loading score>0.5, namely X.5, X.6, and X.7. For OC (Y) and JP (Z), it has six indicators. Furthermore, the PLS analysis also confirms the validation of the indicators, as evidenced that the loading factor is above 0.5. In addition, item of Z.6 strengthened job performance which got a loading factor below the conditions (0.283<0.5), so it did not meet the following analysis mechanism. It displayed the PLS model in Figure 2.

Figure 2 claims that if there is still a loading score of <0.5, then the complexity of the analysis is needed to eliminate those achievements that are smaller than 0.5, including: X.5, X.6, X.7, Y.1, and Y. 6. Then, further analysis is needed by eliminating the construct indicators, then they are converted in Figure 3.

Table 3. Proportional profile of respondents

Characteristics

Measurements

Frequency (N)

Percentage (%)

Gender

Male

159

100

Female

0

0

Ages

20–30

35

22

>30–40

43

27

>40–50

46

29

>50–60

35

22

Education certification

High School (SMA)/ Vocational High School (SMK)/ equivalent

140

88

Diploma

19

12

Bachelor

0

0

Status

Married

139

87.4

Single

20

12.6

Working period

1–10

23

14.4

>10–20

41

25.8

>20–30

65

40.1

>30–40

25

15.7

>40

5

3.14

Source: [59].

Table 4. Composition of variables and indicators

Variable/indicator

Loading

(stage 1)

Loading

(stage 2)

CR

AVE

Autentic leadership

X.1: My manager seeks feedback to improve interactions with others.

0.758

0.792

0.920

0.744

X.2: My manager said exactly what he meant.

0.774

0.765

 

 

X.3: My manager demonstrates consistent belief in action.

0.933

0.968

 

 

X.4: My manager listens carefully to different points of view before drawing conclusions.

0.880

0.908

 

 

X.5: My manager encourages everyone to have their say.

-0.257

 

 

 

X.6: My manager tells you the hard truth.

-0.362

 

 

 

X.7: My manager analyzes the relevant data before making a decision.

-0.352

 

 

 

Organizational climate

Y.1: I feel that the work environment is very supportive to perform better.

-0.117

0.794

0.836

0.507

Y.2: I feel that the relationship between subordinates and superiors is harmonious.

0.807

0.746

 

 

Y.3: I feel that the relationship between subordinates and superiors has fostered mutual respect for each other.

0.638

0.797

 

 

Y.4: I feel that the relationship between me and my co-workers is harmonious.

0.736

0.750

 

 

Y.5: I don't have any barriers to communicating with my co-workers.

0.678

0.711

 

 

Y.6: The facilities available in the work environment have supported my work.

0.691

0.671

 

 

Job performance

Z.1: Employees complete the assigned tasks well.

0.700

0.706

0.853

0.534

Z2: Employees complete their duties and responsibilities as described in the job description.

0.637

0.648

 

 

Z.3: Employees adhere to formal performance ethics at work.

0.771

0.770

 

 

Z.4: Employees are willing to help work colleagues whose workload is excessive.

0.819

0.821

 

 

Z.5: Employees protect organizational property.

0.701

0.697

 

 

Z.6: Employees are willing to listen to other employees who are down.

0.283

 

 

 

Source: survey results.

Source: SmartPLS

Figure 2. Structural relationship between variables

Source: SmartPLS.

Figure 3. Construct post elimination effect

In the second stage, we concluded the value of the loading factor for each indicator to meet the requirements to reach above 0.5 (loading factor>0.5). On the other hand, the foundation for the outer loading test on three variables based on convergent validity resulted in a score of> 0.5. The AVE score appears to be above 0.5 and the CR score is also greater than 0.7, so it has fulfilled the statistical commitment. Perspective by Hair et al. [60], if the outer loading is > 0.70, it is recommended, but if the loading factor is 0.50 – 0.60, it can still be tolerated, referring to the t-statistical score>1.96 or p-value<0.05 [61].

Table 5 describes that in combining the model with PLS. This begins with the acquisition phase of R2 on the dependent latent variable. Authentic leadership and organizational climate, which act as latent variables, show R2 of 43%. The motive indicates that the latent variable studied has given a great determination to job performance. There are 57% residual factors outside of the model bond. Partially, authentic leadership has pumped up the organizational climate to 6.8% and job performance has reached 38.6%. However, 26.8% of effective commitments have been influenced by other motives not discussed. In transition, the partial effect on the three structures that are classified as moderate indicates the model built can predict causality between authentic leadership and job performance through organizational climate.

Table 6 frames the results of t-statistics>t-table across the studied variables, referring to the first and third hypotheses (H1 and H3). It appears that the path effect is>1.96, where p <0.05. Contemporarily, it means that there is a positive and significant influence between authentic leadership on organizational climate and organizational climate with job performance.

The evaluation of the partial and mediating testing model revealed that three hypotheses were accepted (p<0.05) and one was rejected (p>0.05). It is proven that authentic leadership has a significant impact on organizational climate (p=0.001), then organizational climate significantly affects job performance (p=0.000), and authentic leadership can optimize the job performance of employees through mediating effects by organizational climate (p=0.005). But ironically, authentic leadership actually diminishes job performance, because p=0.313. Other events also highlight the most dominant of other relationships, involving the effects of organizational climate on job performance.

Table 5. R-square output

Matrix

R2

Remarks

AL–OC

0.068

Weak

AL–JP

0.386

Moderate

OC–JP

0.432

Strong

Source: SmartPLS.

Table 6. Summary on hypothesis testing

Linkages

Effect

Original sample

T-statistics

Prob.

Hypothesis accepted?

AL→OC

Partial

0.261

3.399

0.001

Yes

AL→JP

Partial

0.066

1.010

0.313

Not

OC→JP

Partial

0.802

23.996

0.000

Yes

AL→OC→JP

Mediating

0.224

2.851

0.005

Yes

Source: SmartPLS.

5. Discussion

Organizational climate is a procedure, policy, practice in an organization that balances four elements: autonomy, leadership talent, structure, and authority [62]. From the analysis, authentic leadership is able to create an essential organizational climate. This is urgent for the organization because they orient it to the atmosphere of management policies and a work atmosphere that is directly integrated into the mood of the employees as part of their efforts and job responsibilities. Ideally, authentic leadership is a vital breakthrough to optimize the organizational climate, where the strategic leap rests on consistent leadership believes [63]. Massive organizational climate shows leadership factors for interaction between individuals, good communication techniques, employed role involvement at work, and upholds the value of togetherness. A sustainable reward system also indicates the desire of employees to achieve success [64].

In the end, the authentic leadership dimension strengthens in managing and shaping the organizational climate. In this scope, employees’ perceptions of leadership characteristics imply ways of working and managerial styles to continuously improve the organizational climate.

The findings of this study are in line with previous publications that framed the impact of authentic leadership as a significant antecedent to organizational climate [65-67]. In fact, leadership is a catalyst that pays attention to employees. Leadership also plays a central role in stimulating the organizational climate.

The characteristics of employees and their performance influenced the success of an organization. If it made an organization as a pleasant place for them, it will be very beneficial for the organization. It will certainly harm the organization if it does not implement the promotion of good quality human resources. For example, organizations practice HR engagement to promote their organizations.

To realize optimal organizational performance, of course, the consequences require high productivity based on the suitability of the background and goals of the organization itself [68, 69]. In this study, we found it interesting that in order to produce maximum performance, organizations apply selection. Tightening to limit the number of leaders is closely related to performance connectivity and prioritizing productivity over certain units that are considered less than optimal. By giving great trust to employees, the organization should create a positive climate [70].

Empirical analysis also shows the effects of organizational climate have increased that work performance in PT. Kalamur. No serious disturbance to the organizational climate has boosted work performance. The acceptance of policies reflects an effective organizational climate by employees that are actualized by the organization [71]. They can feel the application in the work environment. Work performance influenced high interaction in organizational climate, supports organizational continuity [72]. Relevantly, work performance, which is always demanded high, actually adds to the loyalty of employees, thereby strengthening the internal organization.

The long-term effect of authentic leadership that does not prioritize ethics, service, and transformation actually hampers work performance significantly [73]. It is a whip in authentic leadership that does not change the quality of job performance. In strategic instruction, the presence of the leader is expected to take rational action with career certainty and employee expectations. However, this does not mean that the leadership personality cannot be an example for employees. The initial goal is to stimulate job performance. Authentic leadership has a dual function, namely encouraging and meaningful for work performance that is absorbed by the consistency of the organizational climate.

The results contradict several publications, which conclude that the leader’s actions refer to employee growth and belief values have a significant effect on work performance [74-77]. The quality of authentic leadership has actually become a systematic part of employee work performance [78]. In certain habitats, it closely related the effectiveness of the leadership style on job performance. The ending process of the study concluded that organizational climate has positively mediated authentic leadership on work performance.

The vital differences that show a negative relationship between authentic leadership and organizational climate were investigated by Erkutlu & Chafra [79], Novac & Bratanov [80], and Jang & Kim [81]. Otaghsara [38] and Jang [81] actually assessed that the role of authentic leadership can improve organizational climate. The relationship between authentic leadership and job performance is negative [18, 82-85] and conversely, these two variables appear to be positive by Srivastava & Mohaley [86], Wong & Laschinger [87], and Wang et al. [88]. Comprehensive identification is shown from the findings which conclude that the decline in job performance is influenced by weakness organizational climate [89, 90], but organizational climate strengthens job performance in an integrated manner [91-93].

Organizational climate successfully integrates the effect of authentic leadership on job performance [94, 95]. However, job performance is not always driven by authentic leadership factors and organizational climate [96-99].

6. Conclusions

In principle, this study seeks to educate the effect between authentic leadership on organizational climate and work performance at PT. Kalamur in Samarinda City. PLS output confirms that authentic leadership has a positive and significant impact on the organizational climate. In addition, the organizational climate also improves work performance in a positive and significant way. Although authentic leadership actually stimulates work performance positively, the effect is not significant. The good news is that authentic leadership will foster positive and significant work performance when mediated by the organizational climate. Organizational climate is the key to success at PT. Kalamur.

The managerial implication is a practical solution for the company, where the open-mindedness of the leadership on the lower-middle-upper scale is accused as a crucial aspect that affects the organizational climate and consistency in the work performance of employees. Authentic leadership that is oriented to his subordinates very liked the style of democracy and prioritizes service. Concrete designs need to be designed, especially in the reward and witness system (R&P) in punishing or motivating workers. HRM management policies are individual skills and the future of the organization.

The theoretical contribution lies in the mediating effect of organizational climate on the relationship between authentic leadership and work performance. To the knowledge of the authors, there is no component that connects these two sections. In this way, study excellence is created and adds uniqueness to further agenda studies.

Weaknesses are also inherent in the informant unit, which only invites male technical workers. The non-involvement of female respondents is also not commonly used by researchers. The female workers from PT. Kalamur occupy many non-technical or administrative positions. Therefore, the logical perception of male respondents is not the same as that of female workers. In fact, the type of sample must also examine all sides.

Acknowledgment

This research is a collaborative actualization of two institutions: Mulawarman University & Universiti Teknologi Mara. There are financial help as internal grants from the Faculty of Economics (Mulawarman University) which supports the publication costs.

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