Enhancing Performance through Improving Participatory Leadership Work Engagement and Compensation

Most of the organizations encounter the problem of a low level of performance, including the Kotaku Office in Aceh Province, Indonesia. There have been communities complaints on the infrastructure development by the Kotaku office, as the main strategic programs of the office are to ensure the presence of the National Slum Upgrading Program (Program Kota Tanpa Kumuh - Kotaku) in Indonesia. This study aims to measure and analyze the mediating effects of employee performance on the influences of participative leadership style, work engagement, and compensation on organizational performance of the Kotaku institution in Indonesia. Of 208 Kotaku officers, 140 of them were selected as the sample of the study using the proportionate stratified random sampling. This study gathered the data by distributing questionnaires to the respondents and they were analyzed using the Structural Equation Modeling (SEM) technique. The study found that participatory leadership style, work engagement, and compensation positively and significantly affected employee performance. In addition, the study also documented the mediating effect of employee performance on the relationships between participatory leadership, work engagement, compensation, and organizational performance. These findings implied that any efforts done to improve the organizational performance should be focusing on the enhancement of employee performance on the basis of empowering participatory leadership, work engagement, and compensation.