The Effect of the Principles of Fairness and Transparency in Good Corporate Governance on Employee Loyalty Through Job Satisfaction as an Intervening Variable
DOI:
https://doi.org/10.38035/sijdb.v4i1.388Keywords:
Good Corporate Governance, Fairness, Transparency, Job Satisfation, Employee LoyaltyAbstract
This study aims to analyze the influence of the principles of fairness and transparency in the implementation of Good Corporate Governance (GCG) on employee loyalty, with job satisfaction as an intervening variable. The phenomenon of low employee loyalty in various organizations is often associated with the weak implementation of good corporate governance principles, especially in the dimensions of fairness in decision-making and information disclosure to employees. This study uses a quantitative approach with the explanatory research method, where data is collected through a questionnaire and analyzed using the Partial Least Square Structural Equation Modeling (PLSSEM) method using SmartPLS 4.0 software or Path Analysis. The conceptual framework is built based on a literature review on organizational justice theory, social exchange theory, and two-factor job satisfaction theory. The research sample is 64 employees of PT Central Proteina Prima Tbk who come from various organizational functions. The results of the theoretical study show that fairness (P-value = 0.000) and transparency (P-value = 0.000) have a positive and significant effect on job satisfaction. Job satisfaction (P-value = 0.004) also has a positive and significant effect on employee loyalty. However, directly fairness (P-value = 0.102) and transparency (P-value = 0.999) did not have a significant effect on employee loyalty. Job satisfaction was proven to mediate the full mediation effect of fairness on loyalty (P-value = 0.034) and the effect of transparency on loyalty (P-value = 0.014). The research model was able to explain the variance in job satisfaction of 71.0% (R-Square = 0.710) and employee loyalty of 68.2% (R-Square = 0.682). In conclusion, fairness and transparency do not directly increase loyalty, but must create job satisfaction first. Job satisfaction acts as a full mediation that bridges the two GCG principles to loyalty. It is suggested that management strengthen fairness in performance appraisals and compensation, increase transparency of policy information and career paths, and routinely measure job satisfaction to maintain employee loyalty in a timely manner. The application of this study is expected to provide input for organizational management in designing governance policies that are oriented towards the psychological well-being of employees to increase long-term retention and loyalty.
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Copyright (c) 2026 Sri Yulianti, Rika Habsari Widiarsanti, Hammad Hammad, Ignatius Erik Sapta Yanuar
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