Organizational dynamics of employee performance in Indonesian banking with reference to Islamic work values and workplace engagement

Employee performance is fundamental to sustaining Islamic banking institutions, where organisational practices are closely intertwined with religious and cultural values. This study examines how work–life balance, workplace spirituality, employee engagement, and Islamic work values interact to influence employee performance in Indonesian Islamic rural banks (BPRS). Using covariance-based Structural Equation Modelling (SEM-AMOS) with data from 228 employees, the results show that work–life balance and employee engagement are the strongest and most consistent predictors of performance, while workplace spirituality enhances performance indirectly through engagement. Islamic work values do not exert a direct effect on engagement or performance; instead, they operate indirectly by strengthening work–life balance.This study offers a clear theoretical novelty by introducing a values-through-practices mechanism, demonstrating that Islamic work values contribute to performance only when translated into supportive organisational practices. It also extends engagement theory in a faith-based organisational context by identifying a sequential pathway of IWV → WLB → EE → EP—an indirect effects pattern not previously tested in Islamic banking research. Practically, the findings provide a value-based framework for developing human resource strategies that integrate work–life balance initiatives, meaningful work environments, and engagement-driven performance systems within Islamic financial institutions.