The influence of transformational leadership on employee performance through dynamic capability and organizational learning

Background Human Resources (HR) has become one of the crucial factors in organizations. The role of HR has evolved from administrative tasks to a strategic partner that helps achieve organizational goals. Employee performance is a key factor for organizational success, influenced by leadership styles such as transformational leadership. In a competitive and dynamic business environment, dynamic capabilities and organizational learning are essential for enhancing employee performance. Purpose: This study explores the connections between Transformational Leadership, Dynamic Capability, Organizational Learning, and Employee Performance. It also investigates the link between Transformational Leadership and Employee Performance, mediated by Dynamic Capability and Organizational Learning. Methods This research adopts an explanatory approach to elucidate the cause-effect relationships among variables. The study population includes all employees, ranging from staff to directors, at PT. Pertamina Lubricants spans its headquarters, sales regions, and production units in Indonesia. A sample size of 156 individuals was utilised for analysis. Structural Equation Modeling using the SmartPLS method was employed for data analysis. Result The findings suggest that Transformational Leadership has a significant and positive impact on Dynamic Capability and Organizational Learning. However, Transformational Leadership has a non-significant and Employee Performance. Additionally, Dynamic Capability and Organizational Learning significantly and positively influence Employee Performance. Conclusion The study highlights the critical role of Dynamic Capability and Organizational Learning in enhancing Employee Performance. While Transformational Leadership positively influences organizational processes, its direct impact on Employee Performance is minimal, indicating that dynamic capabilities and organizational learning serve as vital mediators in the leadership-performance relationship.