The Mediating Role of Human Resource Development in Linking Ethical Leadership and Organizational Culture to Employee Performance at Perumda Tirtanadi

Abstract

This study investigates how Human Resource Development (HRD) is positioned at Perumda Tirtanadi as an intervening variable in the relationship between ethical leadership and company culture and employee performance, a regional water utility provider in North Sumatra, Indonesia. The research is motivated by inconsistent employee performance particularly regarding timely task completion even though the company has implemented various HRD initiatives. A quantitative approach was adopted using Partial Least Squares Structural Equation Modeling (PLS-SEM) through SmartPLS 3.0. The sample comprised 82 head office employees selected from a population of 429 using the Slovin formula. Data were gathered through questionnaires employing a five point Likert scale. The results show that: (1) ethical leadership significantly and favorably affects worker performance; (2) ethical leadership does not significantly influence HRD; (3) organizational culture positively and significantly affects employee performance; (4) organizational culture positively and significantly affects HRD; (5) HRD positively and significantly affects employee performance; (6) HRD does not mediate the link between ethical leadership and employee performance; and (7) HRD mediates the relationship between employee performance and organizational culture. Organizational culture appears to be the strongest driver of HRD and employee performance, whereas ethical leadership mainly contributes directly to performance. These results offer practical guidance for state-owned enterprises to strengthen organizational culture and refine HRD programs in order to improve employee performance.