JRSSEM 2022, Vol. 02, No. 2, 149 – 158
E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494
DOI : 10.36418/jrssem.v2i2.250 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
THE EFFECT OF LEADERSHIP TOWARDS THE
PERFORMANCE OF MSME EMPLOYEES IN CIREBON
REGENCY
Wenty Febrianti
1*
Budiman Abdulah
2
1,2
STIE Muhammadiyah Jakarta, Indonesia
e-mail: wentystiemj@gmail.com
*Correspondence: wentystiemj@gmail.com
Submitted: 25 August 2022, Revised: 03 September 2022, Accepted: 23 September 2022
Abstract. In Indonesia, MSMEs play an important role in increasing employment, contributing to
Gross Domestic Product (GDP) and providing a safety net, especially for those suffering from
economic and financial crises. The Indonesian government has realized the importance of the
presence of MSMEs in Indonesia, including through the establishment of a special platform under
the Ministry of Cooperatives and Small and Medium Enterprises. This research aims to determine
and analyze the influence of leadership on the performance of MSME employees in Cirebon
Regency. The method used in this research is regression analysis with path diagrams, by testing
the outer model and the inner model using SmartPls. The sampling technique in this study uses
the Slovin formula so that the number of samples in this research is 280 employees who work in
the MSME sector in Cirebon Regency. The results of the study indicate that leadership has an
influence on the performance of MSME employees in Cirebon Regency. so that the managerial
implications that must be carried out by leaders in terms of improving employee performance are
increasing the role of leaders in terms of innovation, and motivating employees and paying
attention to the welfare of their employees.
Keywords: leadership; employee performance; MSME.
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DOI : 10.36418/jrssem.v2i2.250 https://jrssem.publikasiindonesia.id/index.php/jrssem/index
INTRODUCTION
In Indonesia, MSMEs have a significant
role in increasing employment, the
formation of gross domestic product
(GDP), and providing a safety net, especially
for people affected by the financial and
economic crisis. The Indonesian
government considers the importance of
the existence of MSMEs in Indonesia, one
of which is by establishing a special forum
under the Ministry of Cooperatives and
SMEs (Munthe, 2022). Human resource
management for MSMEs is an important
skill that must be possessed by MSME
actors, indeed in general, MSME businesses
prioritize marketing and financial activities
because these two activities are
determinants of business growth, but if
examined further the role of HR
management is also important in the world
of MSMEs because human resources are
the main key.
Productivity and performance have a
relationship with human resources. Human
resources are very important in an
organization or company, because they are
the ones who will work together and
mobilize their resources to achieve
organizational goals. Therefore, it is
necessary to have quality human resources.
The factors that can be used to improve
performance include leadership (Pratama,
2022). (Hanifah et al., 2014) says that
leadership is a behavioral norm used by a
person when that person tries to influence
the behavior of others. Leaders are
important for all types of organizations and
have different roles in performing functions
within the organization, the goal of each
organization is to survive and maintain its
entity by improving performance (Arslan &
Staub, 2013). In the midst of the current
COVID-19 pandemic, the leader's role in
improving employee performance is very
necessary, because the impact caused by
this pandemic requires every sector of life
to carry out activities online, so that new
habits are implemented in the era of the
COVID-19 pandemic.
Table 1. Factors Causing Decrease in Employee Performance During the COVID-19 Pandemic
No.
Explanation
1.
2.
3.
4.
Employees feel uncomfortable and unsafe to work because the health
protocol regulations recommended by the Government during the
pandemic are not properly controlled, so that concerns arise for employees
that can interfere with performance.
Employees must adapt and start learning new habits such as work from
home (WFH) so that the impact on employee performance becomes
unstable.
Lack of motivation from the leadership to encourage and improve
employee performance.
The shadow of Termination of Employment (PHK) due to declining sales
which has an impact on declining profits due to low employee
performance and due to the effect of WFH continues to haunt employees
151 | The Effect of Leadership Towards the Performance of MSME Employees in Cirebon
Regency
No.
Explanation
so that it interferes with the concentration process at work.
Sumber : Widaningsih, et.al (2020)
Base on the table above, according to
the research of (Japutra & Situmorang,
2021) it can be seen that the average
decrease in employee performance is when
new habits are implemented related to
stopping the spread of the covid-19 virus,
so a leadership role is needed as the owner
of MSMEs in overcoming this and of course
there are differences in leadership practices
before COVID-19 and now in terms of
communication patterns and work
methods. The pattern of communication
and work methods applied in this era is all
digital, which requires employees to
struggle hard to adapt, not to mention the
fear of a decrease in salaries and even
layoffs due to the financial impact felt by
the company, so the role of leadership in
terms of sensitivity to employee needs
must also be considered because such
conditions will have an impact on
employee performance. As like as research
by (Asrar-ul-Haq & Kuchinke, 2016); (Zia-
ud-Din et al., 2017); (Gibbs et al., 2017).
They found that leadership has positive and
significant effect on employee
performance. However, this contradicts
research conducted by (Iqbal et al., 2015)
and (Santoso et al., 2020) which state that
leadership has a negative and insignificant
effect on employee performance. This
creates a research gap between the
research conducted and the conditions in
the field. On this basis, researchers are
interested in conducting research related
to leadership on the performance of MSME
employees in
Cirebon Regency.
According to (Lusher et al., 2013),
leadership has an important role in the
development and growth of any
organization. The reason for this fact is that
the leaders of the organization generally
consider all the plans and business
decisions, effective and timely decisions
considering by the leadership of the
organization can have a wide impression
on the crucial business results. Leadership
is key to good performance since it
coordinates both utilization of human and
other resources in the organization
(Madanchian et al., 2016). Good leader
motivates employees and motivated
employees does not only increase his or her
job performance and commitment within
an organization, but also goes beyond the
job requirements thus increasing the
organization‘s general performance and
making it more profitable. (Chen, 2013)
pointed out that a successful leadership
knowledge results from the key elements
consist of changing attitudes, personnel
development, and improved business and
leadership skills. Leadership as crucial
element in the organisational behaviour
landscape, whereby it is one of the flexible
impacts of individual and organizational
interactions (Obiwuru et al., 2011).
Delineated leadership’s role as a judicious
tool in motivating the employees towards
accomplishing upgraded growth and
development.
Wenty Febrianti, Budiman Abdulah
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Employee Performance
(Gunawan, 2017)explain that the
working performances are the important
issue in the human resources management
and it is even the main requirement for a
successful organization. (Jeffrey &
Soleman, 2017) put out that the
performance management is a process of a
purpose, an evaluation and of a
performance development to improve the
employees’ ability. In this way, the
company’s goal can be fulfilled.
(Armstrong, 2016) defines that
performance management is the
continuous process of improving
performance by setting goals that are
aligned to the strategic goals of the
organization, planning performance to
achieve the goals, reviewing progress, and
developing the knowledge, skills and
abilities of people. The balanced score card
is the management concept which turn a
strategy into an action.
Effect of Leadership on Employee
Performance
In a business organization activity,
leadership practice is very important but
sometimes in reality the leader does not
provide a role and contributes less in
matters relating to the performance of his
employees even though the role of
leadership can also determine how
employees behave in an organization and
in carrying out or completing their work. As
like as research by (Wen et al., 2019) found
that leadership has an effect on employee
performance.
Base on the previous research above,
the framework from this research is as
follows:
Figure 1. Frame Work Of Research
Source: Data were processed by researchers
Employee
Performanc
e (Y)
X1.1
X1.2
X1.3
X1.4
X1.5
X1.8
X1.9
X1.10
X1.6
X1.7
Leadershi
p (X)
X1.1
X1.2
X1.3
X1.4
X1.5
X1.8
X1.9
X1.10
X1.6
X1.7
153 | The Effect of Leadership Towards the Performance of MSME Employees in Cirebon
Regency
So that the hypotheses is suspected
that there is an influence of leadership on
employee performance.
METHODS
The method in this research is
regression with path analysis which is then
processed using the SmartPls program by
comparing t count and t table in
determining the correlation between
variables which previously do instrument
test, convergent validity and reliability. In
this research, variables of research were
classified into two parts, they are
exogenous variables and endogenous
variables. Exogenous variable is any
variable that affects other variables, but is
not influenced by the previous variable.
While the endogenous variable is any
variable that is influenced by other
variables. In this research, the exogenous
variable is leadership while the
endogenous variable is the performance of
MSME employees. The population of this
research is employees who work at MSMEs
in the Cirebon Regency area with a
sampling technique using probability
sampling. Determination of the sample in
this study using the slovin formula, namely:
280 employees. The types of data collection
carried out are primary data (observations,
questionnaires) and secondary data
(journals, books, previous studies).
RESULTS AND DISCUSSION
Respondent Characteristics
The finding of the respondent
characteristics showed that more male
respondents than female respondents,
male respondents were 175 people (63%),
whilst female respondents were 105 people
(38%). Based on the educational
background, the undergraduate
respondents were 16 people (6%), senior
high school respondents were 144 people
(51%), junior high school respondents were
68 people (24%) and 52 people (19%) were
respondents from primary school
respondents. Based on the age, 14-20 years
old respondents were 31 people (11%), 21-
35 years old respondents were 110 people
(39%), 36-45 years old respondents were 63
people (23%), 46-50 years old respondents
were 23 people (8%) and > 50-year-old
respondents were 53 people (19%).
Outer Model Test
The first order confirmatory with path
diagram of causal relationship is the data
analysis used in this research. Then the
instrument test through the outer model
test, namely convergent validity and
reliability on each indicator. Below are the
output results on the convergent validity
path diagram:
Wenty Febrianti, Budiman Abdulah
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Figure 2. Convergent Validity
Source: Data were processed by researchers
Base on figure above can see that,
indicator has valid if value of factor loading
is more than 0,5. If the factor loading less
than 0,5 so that the indicators are not valid
and must be drop out. Base on result of
convergent validity test above, they are
several has value less than 0,5 so that its
must be drop out due to not valid and after
drop out must be re test of convergent
validity as like as figure below:
Figure 3. Re Convergent Validity Test
Source: Data were processed by researchers
After do re test of convergent validity,
can be see that the indicators has valid due
to factor loading has more than 0,5. And
then base on reliability test can be
concluded that leadership variable has
0,772 and employee performance variable
has 0,757 with Cronbach alpha more than
0,6 so that the indicators has good
reliability or can be measure its construct.
Inner Model and Hypothesis Test
Inner model test in this research are R
2
test and hypothesis test. The function of R
2
can be show how big is the contribution of
155 | The Effect of Leadership Towards the Performance of MSME Employees in Cirebon
Regency
Ha: 0,584
exogenous variables to endogenous
variables, whereas the function of
hypothesis to show influence between
variable. Value of R
2
in employee
performance variable has 0,341 which
indicates that employee performance
variable can be explanation by leadership
variable is 34,1%, while the rest is
influenced by other variables not examined
in this research. To show influence between
variable so do hypothesis test with
compare t counts with t table, hypothesis
accepted if value of t counts > t table, in
this research t table is 1,6503, base on
hypothesis test by SmartPls so the result is:
Table 2. Hypothesis Test
Correlation Of Between
Variable
Parameter
Coefficient
T
statistic
P
Value
Explanation
Leadership (X) -> Employee
Performance (Y)_
0,584
11,913
0,000
Significant
Source: Data were processed by researchers
Base on the path parameter coefficients
obtained in table 2 so that the model of the
research can be explained as follows:
Figure 4. Path Diagram of Hypothesis Test
Source: Data were processed by researchers
Y = 0,584+e …………………………..(1)
The Effect correlation between variable
in above table can be explanation is: The
path parameter coefficient obtained from
the influence of the leadership variable on
employee performance is 0.584 with a
tstatistic value of 11.913 > 1.6503 at a
significance level of 0.05 (5%) stating that
there is a positive and significant influence
between leadership on employee
performance. The value of 0.584 in the
parameter coefficient means that if the
leadership increases by 1 then employee
performance will increase by 58.4%. The
results of this research support the research
hypothesis where there is a positive and
significant influence between leadership on
employee performance of MSME
employees. As like as research conducted
finding that leadership has an effect on
employee performance. so that the
hypothesis is accepted.
Leadershi
p (X)
Employee
Performanc
e (Y)
Wenty Febrianti, Budiman Abdulah
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CONCLUSIONS
After do hypothesis test in this research,
founded that the impact of leadership
towards employee performance has
positive significant and base on
explanation above that output this research
has answer of the phenomena in the object
of research. So that necessary to develop
managerial policies to give contribution of
theoretical to leaders in managing
employees. The managerial implication
that needs to be done in improving the
performance of MSME employees in
Cirebon Regency is that the leader in this
case the owner of the place of business
must be able to have an innovative spirit
who has a high curiosity about the
development of the industrial world so that
it can lead to new perspectives and new
knowledge, especially in the development
of business products. and always see the
opportunities that exist and take these
opportunities into an advantage so that
there is confidence in employees that this
business can be a big business that is able
to provide welfare for its employees, so that
it can encourage employees to further
improve their work performance in order to
realize business success together. Leaders
must be able to read every employee's
needs, especially the issue of health
insurance for employees in this era of the
COVID-19 pandemic, health insurance is
very much needed by employees, if this can
be used as an important point in
generating employee work motivation. In
addition, the leader must take several
actions such as paying more attention to
the room where the employees work, due
to the fact that a comfortable workspace
can have an impact on completing work to
the maximum. Make work rules that don't
corner and don't put too much pressure on
employees but employees feel disciplined
and responsible with these regulations,
give rewards if employees excel, and always
do work evaluations.
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© 2022 by the authors. Submitted
for possible open access publication
under the terms and conditions of the Creative
Commons Attribution (CC BY SA) license
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