The Effect of Transformational Leadership on Employee Loyalty at the Regional Revenue Agency of North Sumatra Province

Abstract

This study aimed to examine the effect of transformational leadership on employee loyalty at the Regional Revenue Agency of North Sumatra Province, Indonesia. In the context of public sector governance, effective leadership plays a crucial role in enhancing organizational performance and fostering employees’ commitment to the organization. Transformational leadership, characterized by the ability to inspire, motivate, and provide vision, is considered an important factor in strengthening employee loyalty. Therefore, this research sought to provide empirical evidence regarding the relationship between transformational leadership and employee loyalty within a public sector institution responsible for managing regional revenue. A quantitative approach was employed using survey data collected from 70 respondents through a structured questionnaire. The validity and reliability of the research instrument were tested using Pearson’s correlation and Cronbach’s Alpha to ensure that all questionnaire items were valid and reliable. Descriptive statistical analysis indicated that both transformational leadership and employee loyalty were perceived positively by respondents, as reflected in relatively high mean scores and moderate standard deviations. Furthermore, simple linear regression analysis and a t-test were conducted to test the research hypothesis. The results demonstrated that transformational leadership has a positive and statistically significant effect on employee loyalty, with a significance value of 0.000 and a regression coefficient of 1.520. The coefficient of determination (R² = 0.978) showed that 97.8% of the variance in employee loyalty could be explained by transformational leadership, while the remaining 2.2% was influenced by other factors outside the research model. These findings indicate that higher levels of transformational leadership are associated with stronger employee loyalty within the organization. This study highlights the importance of implementing effective leadership practices to enhance employee commitment and organizational performance in the public sector.