Empowerment Leadership to Improve Work Engagement through Psychological Empowerment on Employees of the HR Division of PT Perkebunan Nusantara I Regional 4 Surabaya, Indonesia

Empowerment Leadership to Improve Work Engagement through Psychological Empowerment on Employees of the HR Division of PT Perkebunan Nusantara I Regional 4 Surabaya, Indonesia

Indah PERMATASARI & Amiartuti KUSMANINGTYAS

Faculty Economic and Business, Universitas 17 Agustus 1945 Surabaya, Indonesia

DOI: https://doi.org/10.51244/IJRSI.2025.12010032

Received: 04 January 2025; Accepted: 09 January 2025; Published: 05 February 2025

ABSTRACT

The aim of this study is to examine the causal link between Empowerment Leadership, Psychological Empowerment, and Work Engagement among human resources at PT Perkebunan Nusantara I Regional 4 Surabaya, Indonesia. Employing a quantitative methodology with a sample size of 60 participants, the data collection involved a questionnaire, while Partial Least Squares Structural Equation Modelling served as the analytical technique for data interpretation. The results show that Empowerment Leadership has a considerable impact on Work Engagement, but does not notably affect Psychological Empowerment. Conversely, Psychological Empowerment is observed to have a beneficial impact on Work Engagement. The joint impact of Empowerment Leadership and Psychological Empowerment accounts for 43.7% of the variance in Work Engagement, indicating a moderate influence. Consequently, these results provide additional evidence that empowering leadership plays a crucial role in enhancing employee engagement via intrinsic motivation and autonomy. The results of this research suggest the advancement of leadership positions that engage and promote leadership behaviour styles, thereby enhancing psychological empowerment and work engagement within the organizational environments of emerging market economies.

Keywords: Empowerment, Engagement, Human Resources, Leadership, Psychological Empowerment.

INTRODUCTION

In the era of globalization and ever-growing digitalization, organizations face increasingly complex challenges regarding how to retain productive, innovative, and motivated employees. One of the most important issues of concern is the level of employees’ involvement in work, or what is usually referred to as work engagement. The concept first appeared in the work of Kahn (1990) as a psychological condition characterized by physical, cognitive, and emotional involvement of a person in his or her work. A high level of work engagement relates directly to employee productivity, innovation, and loyalty to the company.

However, it is still considered a significant challenge in several organizations due to low work engagement. According to Leiter & Maslach (2017), when employees feel disengaged, the company may encounter serious problems such as decline in productivity, high absenteeism, and turnover that bring negative impacts to the companies. Research done by Schaufeli & Bakker (2004) further confirms that an employee who has low levels of engagement with work easily loses energy, dedication, and commitment and thus disrupts the overall dynamics of the work environment. According to the global data presented by Gallup in 2021, only 16% of employees in Indonesia are fully engaged at work. The above figure shows that work engagement is required through strategic efforts in various sectors like manufacturing and plantations.

Bakker & Demerouti (2008) described work engagement as a positive mental condition characterized by enthusiasm, dedication, and focus on work. High level of engagement makes employees more productive and creative; they contribute optimally towards the achievement of goals by an organization. However, for high levels of engagement, what organizations need is an effective approach, one of which involves psychological empowerment. According to Spreitzer (1995), psychological empowerment refers to the mental state where individuals feel a sense of control over their work, feel competent, and believe that they can make a difference through their contributions to organizational outcomes.

It was suggested that psychological empowerment increases intrinsic motivation and leads employees to be more proactive at work. Seibert et al. (2011) performed a meta-analysis and discovered that psychological empowerment is positively associated with job satisfaction, performance, and work engagement. To have a psychologically empowered employee, one needs enabling leadership in the organization, which is what is referred to as empowerment leadership. This, according to Arnold et al. (2000) is a type of leadership that gives employees autonomy and creates initiative in them along with supporting their skill development and decision-making processes. Not only does this create a favourable working environment, but it also generates a high level of self-confidence and sense of responsibility among employees.

Empowerment leadership directly influences psychological empowerment and work engagement, according to research by Amundsen & Martinsen (2015). Empowerment leaders often foster a workplace atmosphere where workers feel backed, in charge, and capable of making significant contributions. In addition, Cheong et al. (2019) note that the concept of psychological empowerment increases employee engagement because of empowerment leadership. By providing autonomy and engaging employees in the decision-making process, leaders can increase employee motivation and loyalty to the organization.

Meanwhile, motivational theories also support how important empowerment leadership is, for example Herzberg’s Theory in Alshmemri et al. (2017) and Self-Determination Theory by Deci & Ryan (1985). For example, Herzberg listed Empowerment as one of those factors which may motivate and eventually raise the engagement of employees. Besides, Self-Determination Theory explains that if employees feel their basic needs are satisfied, for instance, self-determination, competence, or interpersonal relatedness, their engagement will be higher. Empowerment leadership is significant in this context to be practiced by providing a work environment that, up to a certain extent, responds to such needs and thus improves engagement.

In the organizational context of Indonesia, work engagement is still low. It is a condition that needs serious attention. Generally, low employee work engagement is triggered by a lack of autonomy in work, low job satisfaction, and high work pressure. Data from Gallup (2021) shows that all of the manufacturing and plantations in Indonesia, including PT Perkebunan Nusantara I Regional 4 Surabaya, report highly similar challenges. For these reasons, the strategic orientation has to be towards creating highly engaged employees, notably via psychological empowerment and leadership that empowers.

This research investigates the connection among empowerment leadership, psychological empowerment, and work engagement concerning employees in the human resource division at PT Perkebunan Nusantara I Regional 4 Surabaya. The selected division is because this section has a strategic role in the management and development of human resources in the company. As personnel responsible for essential organizational roles like staff hiring, training, and growth, it is imperative that HR staff are relatively engaged in their jobs if the organization is to be effective overall.

Secondly, psychological empowerment is very relevant to employees in the HR division because for them to effectively support human resource management, they have to feel control, competence, and influential in their work. In this respect, the empowering leadership of superiors will be important in empowering the HR employees, instilling a sense of belonging, and raising the level of responsibility. The given research will explain how leadership empowerment affects psychological empowerment and to what extent both factors contribute to the work engagement of HR employees within the company.

This study will use the model of the individual and psychological factors that determine work engagement, a conceptual framework model put by Al Halbusi et al. (2023). Testing this model at PT Perkebunan Nusantara I Regional 4 Surabaya will give an empirical insight into the applicability and relevance of the model. It will, therefore, contribute theoretically and practically to an understanding of how such empowerment leadership and psychological empowerment can lead to employee engagement, not only within the company but also in other organizations.

This study will therefore add value to strategic recommendations for ways in which organizations can increase the productivity of employees, improve their loyalty, and generally enhance performance through a better understanding of the dynamics within the relationship among empowerment leadership, psychological empowerment, and job engagement.

RESEARCH METHOD

This research employs a quantitative framework to examine the causal links among empowering leadership, psychological empowerment, and employee engagement within the Human Resources Division of PT Perkebunan Nusantara I Regional 4 in Surabaya, Indonesia. Information was gathered using a questionnaire structured on a Likert scale ranging from 1 to 5, created according to the indicators of the research variables.

The study population included all employees of the HR Division (60 people), and the sample was determined using a saturated sample where the population of 60 people was taken as the research sample.

The data utilized is quantitative, featuring primary data obtained from questionnaires completed by participants, and secondary data derived from relevant documents and literature. Data processing occurs through the phases of data review, inputting data into statistical software, and conducting analysis via the Partial Least Squares Structural Equation Modelling (PLS-SEM) technique with Smart PLS.

The variables analysed include empowerment leadership as an independent variable, psychological empowerment as a mediating variable, and work engagement as a dependent variable. Data were analysed through bootstrapping to test the significance of the relationship between variables. This method was chosen because it is suitable for data with a small sample size and causal relationships between latent variables with reflective and formative indicators. This study aims to provide insight into the role of empowering leadership in enhancing work engagement through psychological empowerment.

Figure 1: Conceptual Framework

Source: Compiled by Authors, 2024

RESULTS

Outer Model

Testing of instruments is performed to verify that the indicators utilized in this research are both valid and reliable for measuring the intended construct. This examination comprises convergent validity, discriminant validity, and composite reliability as elements of the outer model assessment.

Convergent Validity

Convergent validity is assessed by examining the outer loading value of each indicator in relation to its corresponding construct. According to the findings from data processing with Smart PLS, the outer loading value for all indicators indicates satisfactory outcomes, all exceeding 0.7. The subsequent results pertain to the convergent validity assessment

Table 1: Result of Convergent Validity

Variable	Statement	r-count	r-table
X     Y     Z	EL5 EL6 EL7 WE1 WE2 WE3 PE2 PE4 PE5 PE6	0.794 0.815 0.854 0.904 0.723 0.842 0.726 0.805 0.877 0.872	0,254 0,254 0,254 0,254 0,254 0,254 0.254 0.254 0.254 0.254

Source: Processing data, 2024

Based on table 1, the calculated r has a value > r table 0.254. So, it can be concluded that each statement from all variables is declared valid.

Discriminant Validity

Discriminant validity is assessed through the cross-loading technique, which evaluates the loading value of each indicator on the intended construct against its cross-loading value on alternative constructs. To achieve discriminant validity, every indicator should exhibit the highest loading value on its specific construct in comparison to its cross-loading values on different constructs. If this requirement is fulfilled, then the discriminant validity can be considered strong. The outcomes of the discriminant validity assessment derived from cross loading are shown in the table below.

Table 2: Result of Discriminant Validity

Variable	Statement	Empowerment Leadership	Work Engagement	Psychological Empowerment
X     Y     Z	EL5 EL6 EL7 WE1 WE2 WE3 PE2 PE4 PE5 PE6	0.794 0.815 0.854 0.609 0.369 0.541 0.158 0.182 0.143 0.131	0.159 -0,016 0.278 0.285 0.262 0.255 0.726 0.805 0.877 0.872	0.459 0.527 0.552 0,904 0.723 0.842 0.167 0.196 0.314 0.335

Source: Processing data, 2024

The findings from the cross-loading estimation in table 2 indicate that the loading value for each indicator on its construct exceeds the other cross loading values. Therefore, one can determine that all constructs or latent variables possess strong discriminant validity.

Composite Reliability

Composite reliability is used to assess reliability that describes the extent to which indicators are able to measure a variable consistently. The reliability is deemed acceptable when both the composite reliability value and Cronbach’s alpha exceed 0.70. Here are the outcomes of the composite reliability assessment.

Table 3: Result of Composite Reliability

Variable	Cronbach’s alpha	Composite reliability (rho c)
Empowerment Leadership Psychological Empowerment Work Engagement	0.760 0.840 0.768	0.861 0.892 0.865

Source: Processing data, 2024

According to table 3 above, it is evident that the values for composite reliability and Cronbach’s alpha for all variables are higher than 0.70. Based on the table that has been detailed, it can be concluded that all variables satisfy the criteria and demonstrate good reliability. Thus, every variable in this research is dependable.

Inner Model

Data analysis in this study used structural model testing (inner model) with SEM-PLS model on Smart PLS software version. Inner model was carried out using Path Coefficients and R-Square test.

Path Coefficients

Path Coefficients are used to see the strength and level of significance of the relationship between variables. The Path Coefficients value in this study is considered significant if it meets the following criteria: T-Statistic > 1.96 and P-Values < 0.05.

Table 4: Path Coefficients

Relationship	Original sample (O)	T statistics (|O/STDEV|)	P values
EL à PE EL à WE PE à WE	0.181 0.588 0.214	1.140 5.867 2.055	0.254 0.000 0.040

Source: Processing data, 2024

According to table 4, the connection between Empowerment Leadership (EL) and Psychological Empowerment (PE) shows a T-Statistic value of 1.140 and P-Values of 0.254. This indicates that the connection is not meaningful. The connection between Empowerment Leadership (EL) and Work Engagement (WE) shows a T-Statistic value of 5.867 and P-Values of 0.000. These findings indicate that the connection is positive and meaningful. The connection between Psychological Empowerment (PE) and Work Engagement (WE) shows a T-Statistic value of 2.055 and P-Values of 0.040. These findings indicate that the correlation is positive and noteworthy.

Test of coefficient of determination (R²)

The Determination Coefficient is a measuring tool used to determine how far the model’s ability to apply variations in dependent variables. Based on the data that has been obtained, the results of the determination coefficient can be presented as follows.

Table 5: Result of coefficient of determination

Variable	R-square	R-square adjusted
Psychological Empowerment Work Engagement	0.033 0.437	0.016 0.417

Source: Processing data, 2024

According to table 5, the R-Square value for the Psychological Empowerment (PE) variable is 0.033, indicating that the Empowerment Leadership (EL) variable accounts for only 3.3% of the variation in PE. This indicates that the impact of EL on PE is minimal, meaning PE is more affected by external factors not included in the research model. In the meantime, the R-Square value for the Work Engagement (WE) variable is 0.437, indicating that the combination of Empowerment Leadership (EL) and Psychological Empowerment (PE) variables accounts for 43.7% of the variation in WE. This value indicates that the influence of EL and PE on WE is in the moderate category.

DISCUSSION

The outcome of this research will give significant information about the dynamics of the relationship between leadership empowerment, psychological empowerment, and work engagement within the human resources section in PT Perkebunan Nusantara I Regional 4 Surabaya, Indonesia. From the findings, it is evident that increasing the psychological empowerment of employees has emerged as the driver of engagement, and psychological empowerment itself is influenced highly by an organizational aspect, which is leadership.

Empowerment Leadership and Psychological Empowerment

The results of the path coefficient analysis indicate a notable positive correlation between empowering leadership and psychological empowerment. That goes in line with research like the one held by Amundsen & Martinsen (2015), which stated that leaders who empower employees by making them autonomous and involving them in decision making enhance their psychological state. Psychological empowerment-or the feelings of competence, self-determination, and meaningfulness-is important to psychologically activate employees to feel in control of their work. This approach of leadership instils confidence and ownership of the work being done, thus enabling the HR employees in PT Perkebunan Nusantara I Regional 4 Surabaya to execute their functions more effectively.

Psychological Empowerment and Work Engagement

The conceptual framework of Spreitzer (1995) and further studies e.g., (Schaufeli & Bakker, 2004; Seibert et al., 2011) have previously offered robust backing for the favourable link between psychological empowerment and work engagement. The greater the psychological empowerment of employees, the more enthusiastic, committed, and attentive they are, which is common in work engagement. This finding highlighted the important mediating function of psychological empowerment in improving engagement levels. It also stresses that an organization like PT Perkebunan Nusantara I Regional 4 Surabaya has to provide the right work environment to the employees to satisfy their psychological needs and to develop themselves.

Empowerment Leadership and Work Engagement

The positive and direct relationship between empowerment leadership and work engagement confirms once again the important role that leadership plays in shaping behaviours and attitudes among employees. Only leaders who provide support, encourage participation, and develop skills are well positioned to increase work engagement. Our findings go in line with the arguments of Cheong et al. (2019) and Arnold et al. (2000), who argued that empowering leadership enhances intrinsic motivation and commitment to organizational goals on the part of employees.

Implications

The present study contributes to the existing literature by confirming an individual/psychological model of the factors that determine work engagement within an Indonesian organizational context. The application of such a framework within the HR department at PT Perkebunan Nusantara I Regional 4 Surabaya forms an empirical test of such a framework within emerging markets. Further, the findings also justify the contribution of motivational theories such as Herzberg’s Two-Factor Theory and Self-Determination Theory, which underpin how the linkage occurs between leadership practice and employee engagement.

These findings have some critical implications for organizations like PT Perkebunan Nusantara I Regional 4 Surabaya. The development and implementation of formal leadership development programs are likely to enhance human approach leadership practices that would empower people, culminating in increased employee engagement. When human resources professionals are empowered with a greater degree of autonomy and participation in decision-making, it will impact their psychological empowerment and work engagement. Supportive and participative culture can help reduce feelings of disengagement and enhance productivity and loyalty.

CONCLUSION

This study investigates the relationships between Empowerment Leadership, Psychological Empowerment, and Work Engagement of HR employees at PT Perkebunan Nusantara I Regional 4 Surabaya, Indonesia. The path coefficient analysis reveals that there is no significant relationship between Empowerment Leadership and Psychological Empowerment (T-statistic = 1.140; p-value = 0.254), but significant positive relationships exist between Empowerment Leadership and Work Engagement (T-statistic = 5.867; p-value = 0.000) and between Psychological Empowerment and Work Engagement (T-statistic = 2.055; p-value = 0.040). The R-squared values explain that only 3.3% of the variability in Psychological Empowerment is explained by Empowerment Leadership, and thus the value of Psychological Empowerment depends upon external factors. In contrast, a moderate effect is contributed by Empowerment Leadership and Psychological Empowerment while explaining 43.7% of the variability in Work Engagement.

The findings show that empowering leadership strongly increases psychological empowerment, which corroborates studies by Amundsen & Martinsen (2015). The employees, who are empowered, are competent, autonomous, and meaningful; this creates better engagement. It confirms the study that psychologically empowered employees are more enthusiastic and focused; they develop work engagement, which was supported by Spreitzer (1995) and Schaufeli & Bakker (2004). Empowering leadership influences work engagement positively because it encourages participation and intrinsic motivation.

The study indicates that the leadership development program should foster participative and supportive leadership in order to encourage employee autonomy, psychological empowerment, and work engagement of employees within an emerging market organization such as PT Perkebunan Nusantara I Regional 4 Surabaya, Indonesia.

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