Transactional leadership and compensation as mediators of the influence of workforce agility and psychological empowerment on employee performance at Pdam Tirta Indra, Indragiri Hulu, Riau

This study adopts social exchange theory as a theoretical framework to investigate the mediating role of transactional leadership and compensation in the influence of workforce agility and psychological empowerment on employee performance. The research sample consists of 143 employees of PDAM Tirta Indra, Indragiri Hulu, Riau. Data were analyzed using structural equation modeling (SEM) with partial least squares (PLS). This study proposes transactional leadership and compensation as strategies to improve employee performance. The results indicate that workforce agility has an influence on employee performance, whereas psychological empowerment does not have an influence on employee performance. Moreover, transactional leadership mediates the influence of workforce agility on employee performance, while compensation mediates the influence of psychological empowerment on employee performance. These results reinforce social exchange theory, suggesting that high workforce agility, when supported by transactional leadership and adequate compensation, constitutes an effective strategy for improving employee performance.