Strengthening Competency- and Performance-Based Incentive Systems through Work Motivation Mediation in the Context of Regional Bureaucratic Reform

Bureaucratic reform requires strengthening the performance allowance system, which should not only be based on formal achievements but also consider the factors of competence and work motivation of civil servants. This study aims to analyze the influence of competence and performance on performance allowances with work motivation as a mediating variable in the General Bureau and Equipment of the South Sumatra Provincial Secretariat. The study uses a quantitative approach with the Structural Equation Modeling–Partial Least Square (SEM-PLS) method. The research sample consisted of 112 civil servants determined through saturated sampling techniques. The results of the analysis show that competence and performance have a positive and significant effect on work motivation and performance allowances. Work motivation was found to partially mediate the relationship between competence and performance allowances (VAF = 25.2%) and between performance and performance allowances (VAF = 21.7%). The coefficient of determination values indicate a strong predictive power of the model, with R² of 0.941 for work motivation and 0.782 for performance allowances. These findings confirm that the effectiveness of the performance allowance system in the public sector requires strengthening competencies and managing work motivation as internal psychological mechanisms. This study provides theoretical contributions to the development of performance-based remuneration models and practical implications for the formulation of human resource management policies in the local bureaucracy.