Driving Sustainable Performance in Islamic Microfinance: Competence, Compensation, and Employee Engagement

Abstract

This study aims to analyze the influence of employee competence and compensation on sustainable cooperative performance, with employee engagement as a mediating variable in KSPPS BMT Alhikmah Semesta. Based on the Resource-Based View (RBV) theory, human resources are positioned as an organization's internal strategic asset. This causal quantitative research uses a survey method on the cooperative employee population. The sample was determined through purposive sampling with the criteria of active employees, a minimum working period of 1 year, and not peak management, with a final sample of 203 valid respondents. Data collection was conducted using a 5-point Likert scale questionnaire and analyzed using Partial Least Squares-Structural Equation Modeling (PLS-SEM) through SmartPLS 4.1.1.8. The results of the study show that competence, compensation, and employee engagement have a positive and significant effect on the performance of sustainable cooperatives; competence and compensation also have a positive and significant effect on employee engagement; Employee engagement partially mediates the influence of competence on sustainable cooperative performance, but does not mediate the effect of compensation on sustainable cooperative performance because compensation has a dominant direct impact. This research provides a theoretical contribution to the RBV literature and practical input for cooperative management in formulating sustainable human resource strategies.