Capacity Building And Employee Performance In Islamic Financial Institutions: Testing The Moderating Role Of Rewards

This study evaluates the effectiveness of capacity building strategies; covering human resource development, organizational strengthening, and institutional reform on employee performance in Islamic financial institutions, while testing the moderating role of reward. Employing a quantitative approach based on Partial Least Squares Structural Equation Modeling (PLS-SEM) with a saturated sample of 52 employees at PT Pegadaian Syariah Central Branch Makassar, the analysis results indicate that the three dimensions of capacity building do not have a direct significant effect on employee performance. Furthermore, the reward variable is proven not to moderate these relationships. These non-significant findings highlight a decoupling between the formality of capacity-building programs and actual field operational execution, while indicating that the current reward system has yet to align extrinsic motivation with Islamic work values (ihsan). This study provides theoretical contributions by filling the literature gap regarding the uncertainty of capacity building impacts in the sharia-compliant non-bank financial sector, and offers practical implications for management to restructure training designs and incentive structures to be more contextual and operational.