The Influence of Leadership, Work Environment, and Compensation on Employee Loyalty in Islamic Banking in Brebes and Tegal
Keywords:
leadership, Work Environment, Compensation, employee loyalty, islamic banking, human resource management, organizational performanceAbstract
Purpose: This study analyzes the influence of leadership, work environment, and compensation on employee loyalty in Islamic banks in the Brebes and Tegal regions.
Design/methodology/approach: The research used a quantitative survey approach with purposive sampling involving 40 employees of Islamic banks. Data were collected using a structured questionnaire and analyzed through Structural Equation Modeling (SEM) using SmartPLS software.
Findings: The results indicate that work environment and compensation have a positive and significant effect on employee loyalty, while leadership does not significantly influence loyalty. These findings highlight that non-financial and financial factors play a more substantial role in fostering employee loyalty compared to leadership in the studied context.
Theoretical Contribution/Originality: This research contributes to the literature on human resource management by emphasizing the importance of compensation and work environment in Islamic banking institutions. It also adds new empirical evidence showing that leadership may not always directly affect employee loyalty, particularly when organizational systems and compensation structures serve as substitutes for leadership roles.
Research limitation and implication: The study is limited to Islamic banks in Brebes and Tegal with a relatively small sample size, reducing its generalizability. Future research should expand to broader regions, employ qualitative or mixed methods, and include additional variables such as organizational culture, job satisfaction, and motivation. Practically, the findings suggest that Islamic banks should prioritize improving compensation systems and work environments, while also enhancing leadership styles to strengthen employee loyalty.
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