The Effect of Work Culture, Organizational Structure, and Human Resource Competence on Bank Indonesia's Public Service Operationalization Strategy: the Mediating Role of the Fraud Auditing System

Abstract

Bank Indonesia’s currency management function has faced a widening gap between operational workload and the resources allocated to cash services: between 2024 and 2025, the value of unfit banknotes destroyed rose by 47.32% to IDR 94.79 trillion, whereas expenditure on cash distribution and services declined by 8.42%. This study examined the effects of work culture, organizational structure, and human resource (HR) competence on Bank Indonesia’s public service operationalization strategy, with the fraud auditing system as a mediating variable. A quantitative explanatory survey was conducted among 145 employees of the Currency Management Department, drawn purposively from a population of 225 on the basis of the Slovin formula at a 5% margin of error. Data were collected using a five-point Likert questionnaire comprising 63 indicators and analyzed with partial least squares structural equation modeling (PLS-SEM) in SmartPLS 4.0, using two-tailed bootstrapping with 5,000 subsamples. Nine of the ten hypotheses were supported. Work culture (B = 0.282) and HR competence (B = 0.229) significantly affected the operationalization strategy, whereas organizational structure had no significant direct effect (B = ?0.101; p = 0.125). All three internal factors significantly strengthened the fraud auditing system, which emerged as the strongest determinant of the operationalization strategy (B = 0.495). All indirect paths were significant, with HR competence showing the largest indirect effect (B = 0.176); work culture and HR competence were therefore partially mediated, whereas organizational structure was fully mediated. The model explained 52.9% of the variance in the fraud auditing system and 61.9% of the variance in the operationalization strategy (GoF = 0.626; SRMR = 0.050). The full mediation of organizational structure constitutes the principal contribution of this study: structural arrangements improve public service operationalization only when they are translated into stronger control mechanisms. Internal organizational reform should therefore be pursued together with, rather than separately from, the strengthening of the fraud auditing system.