Indonesian Banking Industry New Era: Are they ready to change during digital transformation?

Abstract

This research aims to determine the relationship between transformational leadership (TL) and organizational climate (OC) on readiness to change (RC) with employee engagement (EE) as mediation. The research was aimed at full-time workers in the Indonesian banking industry with a total sample of 352 workers spread across at 4 banks. Data collection was carried out using a questionnaire with a Likert scale. This research is devoted to analyzing the need for a transformational leadership style and creating a good organizational climate for employee engagement and employee readiness in facing change, by testing 7 hypotheses. The results of structural equation modeling show that transformational leadership and the creation of a conducive organizational climate can have an impact on employee engagement which then ultimately encourages and helps employees to better prepare themselves to face change. It can be found in detail that the relationship between variables is Complementary Partial Mediation. The relationship between transformational leadership style, organizational climate, employee engagement and readiness to change has been explored theoretically and tested empirically in the banking industry context in Indonesia.