The Role of Flexible Work Arrangement on Employee Performance Gen Z Indonesia Through Work Engagement and Psychology Well-Being

Muhamad Reza Pahlevi (Universitas Muhammadiyah Semarang)
Firdaus Firdaus (Universitas Muhammadiyah Semarang)
Edy Purwanto (Universitas Muhammadiyah Semarang)
Muchammad Rully Sjahirul Alim (Universitas Muhammadiyah Semarang)
Annisa Fajri (Universitas Muhammadiyah Semarang)

International Journal of Management Science and Information Technology (IJMSIT)
Vol. 6 No. 2 (2026): July - December 2026

Flexible Work Arrangements have become an important human resource strategy for improving employee performance, particularly among Generation Z employees who value flexibility, autonomy, and work–life balance. This study examines the effects of Flexible Work Arrangements on Employee Performance among Generation Z employees in Indonesia, with Work Engagement and Psychological Well-Being examined as potential mediating variables. A quantitative explanatory research design was employed using a survey of 136 Generation Z employees selected through purposive sampling. Data were collected through an online questionnaire and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4.1. The measurement model demonstrated satisfactory reliability and validity, with all constructs meeting the recommended criteria for Cronbach's Alpha, Composite Reliability, Average Variance Extracted, and discriminant validity. The structural model revealed that Flexible Work Arrangements significantly and positively influence Work Engagement (β = 0.333; p < 0.001), Psychological Well-Being (β = 0.321; p < 0.001), and Employee Performance (β = 0.219; p = 0.019). Furthermore, Work Engagement (β = 0.285; p = 0.030) and Psychological Well-Being (β = 0.217; p = 0.048) significantly enhance Employee Performance. However, neither Work Engagement nor Psychological Well-Being significantly mediates the relationship between Flexible Work Arrangements and Employee Performance, suggesting that the performance benefits of flexibility may operate more directly rather than primarily through these psychological mechanisms. The findings extend the Job Demands–Resources Theory and Self-Determination Theory by highlighting Flexible Work Arrangements as a direct organizational resource for improving employee performance among Generation Z. Practically, organizations should design flexible work policies that provide employees with greater autonomy while maintaining clear performance expectations, effective managerial support, communication, and appropriate performance management systems to optimize both employee productivity and well-being in the digital workplace.