Modernizing for performance: Do leadership, service quality, and remuneration drive employee performance in Indonesia’s tax administration?

Abstract

This study tests whether leadership (X1), service quality (X2), and remuneration (X3) are associated with employee performance (Y) in a modernized public-sector setting. Using a quantitative explanatory design, we surveyed all 103 employees of KPP Madya Jakarta Barat (Section Heads, Functional Tax Auditors, Account Representatives, and Operational Staff). Constructs were measured via structured questionnaires; item–total (corrected) validity and Hoyt reliability confirmed sound measurement (α Leadership = 0.89; Service Quality = 0.925; Remuneration = 0.876; Performance = 0.928). Assumption checks included normality (CR skew/kurtosis within ±2.58), residual autocorrelation (Durbin–Watson in the no-autocorrelation band), and visual inspection for heteroskedasticity (scatterplots). Pearson correlations and simple regressions indicated that Service Quality → Performance (β = 0.429; R² = 0.184; p < 0.001) and Remuneration → Performance (β = 0.501; R² ≈ 0.251; p < 0.001) are positive and statistically significant, while Leadership → Performance is not (β = 0.083; R² = 0.007; p = 0.405). Results align with the human-capital and performance-management view that better service systems and incentive architectures lift frontline outcomes, whereas instruction-heavy, paternalistic leadership—common in legacy bureaucracies—may not translate into measurable performance unless it also reallocates decision rights and empowers initiative. Managerial implications include codifying decision rights, strengthening technology/assurance/security cues in service delivery, and making recognition and promotion criteria transparently contingent on service outcomes. Limitations include single-office scope, self-report measures, and potential ceiling effects; future work should test simultaneous/mediated models across offices and link perceptions to behavioral performance traces.