The effects of job crafting on the attraction and retention of skilled talent in Dutch technology-bases start-ups and its moderators

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Attraction and Retention of Skilled Talent

in Dutch Technology-Based Start-Ups and

its Moderators

Author: Rensie R. Kes Student Number: 11399341

Date of Submission: 14.08.2017 (Final Draft)

MSc in Business Administration – Digital Business Track Faculty of Economics and Business

The University of Amsterdam

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Statement of Originality

This document was written by Rensie R. Kes, who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document are original and that no sources, other than those mentioned in the text and its references, have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

This thesis conducted a qualitative study, through semi-structured interviews, to understand how job crafting affects technology-based start-ups, in the Netherlands, in attracting and retaining their skilled talent. Eight interviews were conducted with employees in leadership/human resources roles at technology-based start-ups in different phases. One interview was conducted with a headhunting company specialized in placing certain skilled talent at start-ups and small-to-medium-sized businesses in the Netherlands. The results conveyed that job crafting can play a role in both employee attraction and employee retention at technology-based start-ups but had a more significant role in employee retention. Finally, job crafting was moderated by several factors, which are: job autonomy, social support, job accountability, psychological empowerment, ability to see end-result of work, being heard/involvement in decisions, client contact, consistent and collaborative technology/systems, interesting/challenging work, learning experiences or development, multifunctional teams, newest technologies, pleasant work environment & colleagues, and start-up culture or vibe.

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1 Introduction

In such a time when the business landscape is ever-changing, and doing so rapidly, when competition is fierce, and when business models are in need of innovation; retaining valuable talent is vital (Gallaugher, 2016). Unlike in the past, people expect more from their jobs besides extrinsic rewards like financial gains and promotions. They expect rewards such as fulfillment of their values, meaning, and other intrinsic rewards (Berg, Grant, & Johnson, 2010). If employees are not kept feeling happy, engaged, and feeling valuable, they can easily be poached by competing companies (Gallaugher, 2016). Another issue faced by employers today is employee loyalty. The largest share of the work force today is made up of the millennial generation and they continue to enter the work force. Much discussion surrounds this generation of workers and their loyalty to their places of employment because many do not intend to stay very long at the place that they work (Deloitte, 2016). Contrary to the norms of the last century, people at high-tech jobs consider the fact that they have held many jobs in a small duration of time as positive, because this indicates that they are on the cutting-edge of their fields; previously, this was viewed with skepticism (Cascio & Wynn, 2004). This generation also tends to hold values and have expectations that are completely different to those held by the generation before them, causing problems in attracting and retaining them. They tend to want to learn and develop quickly in an organization, all the while expecting to be able to live a meaningful life beyond the confinements of their work (Ng et al., 2010). At the same time, employers need employees to be proactive for organizational success; they need their employees to be adaptable and innovative in order to compete in today’s market (Singh & Singh, 2016). Therefore, employee attraction and employee retention should be a top priority for many organizations, big or small.

Numerous studies have shown that employee morale has a significant impact on employee turnover decisions, with employee morale including feelings of well-being and job

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7 satisfaction. Typically, if morale is high, retention is high, and vice versa; more recent research has shown that this connection is strong for high performers. The main measures of employee morale that have been used in previous studies are job satisfaction and organizational commitment, both strongly connected to retention (Steel, 2002). The concept of job crafting can be relevant to management, employees, and human resources, in this regard. This is because, when employees are job crafting, they are giving meaning to their work and making it better fit with their personalities and, therefore, they are boosting productivity for the organization (Wrzesniewski & Dutton, 2001). Within the perspective of the organization, encouraging and utilizing a tool like job crafting can become crucial to keeping employees engaged, increasing employee positive attitudes and feelings, increasing employee well-being, and increasing work performance (Singh & Singh, 2016).

Job crafting occurs when an individual makes physical and cognitive changes in the task or relational boundaries of their work. More specifically, there are three types of job crafting that an individual can engage in; they can make adjustments to their work tasks, to their work relations, and/or to their work cognitions, and literature on job crafting reveals that job crafting has positive effects on employee performance, employee experience, and, therefore, on the organization (Wrzesniewski & Dutton, 2001; Wrzesniewski et al., 2013). Additionally, because the opportunity to job craft is associated with autonomy, it is an opportunity perception; thus, the ability to job craft is perceived as positive, psychologically. Motivated individuals thus tend to assess whether the opportunity is there to job craft before doing it (Wrzesniewski & Dutton, 2001). Following logical sequence, this then suggests that people who are looking for that sort of autonomy in their jobs will have assessed whether that opportunity is there, and if it is, that could potentially create a more attractive workplace. Therefore, the use and encouragement of job crafting could potentially be useful for employee attraction and employee retention.

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8 In the Netherlands, attracting and retaining skilled talent is a current and future issue (Rietveld, 2015). Firstly, 25% of the population in 2016 was represented by individuals aged 20-39 years old (Statistics Netherlands, 2016). Millennials belong to the age group of those born between 1979 and 1994 (Myers & Sadaghiani, 2010). Therefore, millennials are a big part of the age demographic of the Netherlands. Their employment loyalty patterns, mentioned earlier, call for emphasized efforts on employee attraction and employee retention. Secondly, the population of the Netherlands is aging steadily and very quickly (OECD, 2017). The Dutch Central Planning Bureau (CPB) predicted labor market changes for the country for up until and including 2017, based on demographic aging. Their predictions suggest that employers within the Netherlands will have difficulties finding skilled workers for their companies. Implications of this are that employees will be expected to be even more proactive in their work and adapt to the demands of their organization and industry (Rietveld, 2015).

Despite this population trend, the Netherlands is also home to many start-ups in Europe (“Founded in Holland,” n.d.). The capital city of Amsterdam is one of the top three cities for start-ups in Europe, especially technology start-ups (Karabell, 2016). Technology start-ups already tend to operate in intense and competitive environments, especially because they must make quick and comprehensive decisions in order to survive (Talaulicar et al., 2005). Organizations that are, or will be, undergoing digital transformations in order to survive in today’s digital landscape, will be seeking and investing in skilled technology talent; talent that is high in demand and exceeding low in supply (Bhens et al., 2016). This same talent is also crucial to technology start-ups, which may not have the same ability to provide financial incentives to these high-in-demand candidates (Dzhingarov, 2016). These issues of such a large portion of the population being difficult to retain, there being a lack of the necessary skilled talent for success due to population aging, and there being a high demand for said

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9 skilled talent, make the Dutch start-up environment challenging. Therefore, the climate of the Dutch labor market appears threatening to technology-based start-ups’ abilities to both attract and retain skilled talent, and thus, to be competitive and grow (Rietveld, 2015).

The previous literature does not focus solely on the effects of job crafting on employee attraction or employee retention. To the best of the author’s knowledge, there is no research linking job crafting to employee attraction. This is presumed because the job crafting literature has been focused on existing employees in their current jobs, not on potential hires, as employees motivated to job craft do so when they feel that their needs are not currently being met in their job design (Wrzesniewski & Dutton). However, the author of this thesis postulates that the ability to job craft may be innate to a culture of a start-up (due to their tendency to operate under less bureaucracy, to function less hierarchically, and to offer more freedom to their employees) and the perceived ability to do so may be a positive characteristic of a start-up that compensates for negative characteristics, such as a lack of job security and a lack of finances, also innate to start-ups (Dzhingarov, 2016; Young Entrepreneur Council, 2013). Because of this, potential hires motivated to job craft and looking for the ability to do so may find working in such a company as attractive. Therefore, the ability to job craft may induce employee attraction. In terms of employee retention, job crafting can produce several outcomes, including positive work meaning and work identity, employee morale, commitment, work engagement, employability, and performance. These outcomes are related to employee retention, but are still not definitively employee retention (Wrzesniewski et al., 2013). Additionally, previous studies have focused on more traditional organizations, whose structures, resources, and employee sizes may completely alter the dynamics of job crafting compared to start-ups in different phases. Therefore, whether or not job crafting induces employee retention, especially in these companies, is unclear.

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10 There is a gap in the research as to whether job crafting can and is playing a beneficial role in technology-based start-ups, given their intense work and market environments (in this case, in the Netherlands,) in attracting and retaining their skilled talent, especially as the skilled talent pool continues to shrink and its demand continues to grow. Therefore, this thesis explores the following research question: How does job crafting affect technology-based start-ups, in the Netherlands, in attracting and retaining their skilled talent?

In sum, this thesis proposes linking employee attraction and retention at technology-based start-ups in the Netherlands with the concept of job crafting for attracting and retaining skilled talent, for the following reasons (some overlap occurs): There are several attraction issues faced by employers today. The millennial generation makes up a most of the global workforce and a significant portion of the Dutch workforce, holding values and expectations different to those held by the previous generation, reducing the ability to completely rely on traditional management styles and recruitment/retention strategies. (Deloitte, 2016; Statistics Netherlands, 2016). Furthermore, the demand of skilled talent exceeds supply (Allen et al., 2010,) making employee attraction crucial.

In addition, there are issues being faced by the Dutch market. The Dutch population is aging, resulting in insufficient skilled talent availability to meet the demands of the market (van Weele et al., 2016; Rietveld, 2015; OECD, 2016). In connection with that, many start-ups are based in the Netherlands; therefore, they are and will be facing a lack of skilled talent. Start-ups generally operate in intense environments (Talaulicar et al., 2005) and face tough survival odds (van Weele et al., 2016). They are at a disadvantage in that they operate under high risk and cannot guarantee stable job security (Dzhingarov, 2016). One of the main issues faced by technology-based start-ups in Western Europe is a lack of funding (van Weele et al., 2016,) making the ability to offer financial incentives for employee attraction and employee retention improbable by those start-ups.

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11 In terms of retention issues, business performance in today’s globalized and competitive market is directly impacted by employee retention (Allen et al., 2010). More so, there is a desire for value and meaning fulfillment in one’s job in today’s society (Berg, Grant, & Johnson, 2010,) calling for improved and innovative practices from managerial/human resource roles to help facilitate this. Though job crafting is a self-initiated, continuous process, it is affected and influenced by external factors, such as management style and organizational structure; therefore, the knowledge of and encouragement of job crafting may constitute as one of the improved and innovative practices that leaders of start-ups and small businesses can engage in (Berg et al., 2013; Wrzesniewski & Dutton, 2001). Finally, and once again, the demand of skilled talent exceeds supply (Allen et al., 2010,) making employee retention of key, skilled talent crucial, as well.

1.1 Intended Contributions to Theory and Management Practice

To the best of the author’s knowledge, there is no previous literature on the effects of job crafting on talent attraction and talent retention, nor specifically in technology-based start-ups. This thesis predicts that job crafting may already be occurring as part of the natural culture in a start-up and that ability to job craft is one of a start-up’s appealing characteristics that compensate for other negatively-perceived characteristics, such as lack of funding and lack of stability/certainty (Moser et al., 2015; van Weele et al., 2016). However, due to the lack of funding and capacity that new start-ups begin with, this thesis expects that the extent to which the types of job crafting may occur could vary, depending on the size, years of experience, and spending power possessed by that the start-up. Therefore, the interviews have been conducted with employees in managerial/supervisory/HR roles or leaders of technology-based start-ups, new, in transition, and those recently grown into small-to-medium-sized businesses. This allows the researcher to find both the common and different trends and opportunities to job craft in start-ups throughout their phases and analyze how

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12 these job crafting activities may connect to employee attraction and retention. If variation in the ways that job crafting can or is already (naturally) occurring in technology-based start-ups exists, this will call for those in leading/supervisory roles at start-ups to consider carefully which aspects of job crafting are sensible for a start-up and why (phases/years of existence, resource availability, end goals, etc.). Additionally, one interview was conducted with a headhunting start-up specialized in placing skilled talent at start-ups and small-to-medium-sized businesses. This was considered useful as many of the companies relied on headhunters to find their talent.

The author of this thesis aims to identify which factors can facilitate the effects of job crafting on either/both the attraction and retention of skilled talent at these companies. The value of this for management or those in supervisory/HR roles at technology-based start-ups would be to understand what they could contribute or help facilitate within their organization in order to achieve attraction or retention goals of skilled talent through job crafting. This could be essential to the success of their company as they rely on their skilled talent to remain competitive and prosper, and as the current market climate indicates a shortage of those people within the Netherlands.

1.2 Research Agenda

This thesis is presented in the following order: First, by providing a literature review used to understand the concepts discussed; this will consist of sections on start-ups and the Netherlands, job crafting, talent attraction and retention, and job resources. The job resources section will include the following subsections: job autonomy, social support, job accountability, and psychological empowerment, respectively. This literature review will then conclude with a depiction of predicted outcomes of the latter four subsections, in the section titled Transition. Second, the methods chapter will discuss the method type chosen (qualitative analysis) and the reasoning, rigor, validity, and reliability of the research, as well

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13 as the participants of the research. Third will be the research analysis chapter, which will analyze the findings of the interviews, which will be followed by the results chapter, divided into six sections. This thesis will then end with the discussion chapter, including the following subsections: the limitations of this research, the implications for future research, and the implications for management practice. Finally, the conclusion will summarize the overall findings of this thesis, which is followed by the bibliography and the appendix.

2 Literature Review

2.1 Start-Ups and the Netherlands

In order to set the stage for how job crafting helps in attracting and retaining skilled talent at technology-based start-ups in the Netherlands, the author of this thesis considered it important to first have a basic understanding of what the work force and start-up situations are like, both in the Netherlands and in the general region. In Western Europe, governments have introduced policies and incubators that encourage the creation and development of technology-based start-ups, although they account for a small percentage of the small business market, in the interests of economic growth, employment, and innovation (van Weele et al., 2016). The European Startup Monitor (ESM) defines start-ups as companies that are not older than 10 years old, have innovative or disruptive business models/technology, and are aimed at and working towards a significant increase in revenue and/or employee number. In order to make the distinction from small and medium sized enterprises (SMEs,) start-ups must adhere to the first and at least one of the other two criteria (Ripsas & Hentschel, 2015).

Start-ups in Western Europe endure high failure rates with approximately one-third of them not surviving their second year as a business (van Weele et al., 2016). In order for them to survive, the paper written by van Weele et al. (2016,) lists several actors in the Western European entrepreneurial ecosystem that can provide the resources necessary for start-ups to

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14 succeed: a talent pool of human capital, especially with technical and entrepreneurial skills; domestic and foreign markets in which to operate; financial capital; support services; universities (in the sense of their capabilities to produce well-educated entrepreneurs and employees); and the necessary physical infrastructure. They go on to mention that the mere existence of these actors is not sufficient; they need to be connected via networks. Correspondingly, in their research, they found that some of the main challenges faced by technology-based start-ups in Western Europe (with the Netherlands being in their sample group,) are: lack of market orientation; lack of an entrepreneurial culture; small domestic market; lack of capital early on; and universities not being focused on entrepreneurship (van Weele et al., 2016). The circumstances behind and scopes of these challenges go beyond the extent of this thesis, but, the lack of market orientation is worth noting. This is because this challenge has to do with delivering a solid value proposition, a key feature of which being managing employees correctly, which was discussed earlier. Arons et al. (2014) have found that if employers can inspire their employees with the brand and its value proposition, their employees can become proud of the brand and commitment to it can increase, and thus they create a consistent spill-over effect of the value proposition from the employees to the customers. Arons et al. (2014) have found this to be a driver of organizational effectiveness. This inspiration by the brand and its increased commitment to it, by the employees, could be a form of cognitive job crafting. This is because the employees can find deeper meaning in the value proposition and their work surrounding it if they are inspired by it, hence the importance of managing employees correctly.

Additionally, technology-based startups operate in high-velocity environments, where making decisions that pertain to organizational changes, alliances within the organization, and investments need to be assessed thoroughly and made quickly in order to survive (Talaulicar, Grundei, & Werder, 2005). With demographic ageing in the Netherlands leading

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15 to a small pool of skilled talent, employees will be expected to be even more proactive in their work and adapt to the demands of their organization and industry, and management will need to protect their talent from being poached (Rietveld, 2015). The need for talent and proactive employees and retaining them becomes obvious in such an environment, so if they are poorly managed because of a lack of know-how, this can become critical to the success of the start-up.

In another study, two of the key challenges found for start-ups in Europe are raising capital and growth, with the Netherlands coming in third place for both. Another key challenge is sales and customer acquisition, where the Netherlands comes in first (Kollmann et al., 2015). Finding, satisfying, and retaining skilled talent is a survival necessity for start-ups in the Netherlands to overcome these challenges, as well. In 2016, companies in the Netherlands reported being held back due to “a shortage of qualified staff,” with one in six firms in the IT sector and one in ten firms in the service sector complaining of this (Dutch News, 2016). The OECD also confirms that “future demand for skilled workers (in the Netherlands) is set to exceed domestic supply over the next decade” and that the “tertiary educated among people aged 25-64” was ranked one of the highest of the OECD countries in 2000 but has hardly seen any growth since that time (OECD, 2016).

The Dutch government is in favor of start-ups, due to start-ups being beneficial to the economy, and intends on contributing 50 million dollars per year to boost start-up growth in the Netherlands from 2017 onwards (Government of the Netherlands, 2017). Although positive for start-up creation and development, and in helping some of the key challenges faced by European start-ups, this also means more vacancies requiring skilled talent and more competition to attain that talent.

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2.2 Job Crafting: What, How, Why

A job consists of a different tasks and relationships to be managed by an individual that was, traditionally, designed and passed on from management within an organization, thus placing the employee in a somewhat passive position (Wrzesniewski et al., 2013). However, job crafting occurs when “employees shift the boundaries of their work, either by expanding or narrowing their job descriptions” (Huss, 2016). This gives employees the opportunity to be proactive, rather than passive, and redesign their own jobs to give meaning to their work and to their work identities (Wrzesniewski & Dutton, 2001).

Job crafting can be conducted in three ways: task crafting, relational crafting, and cognitive crafting. Task crafting is when an employee changes the “physical or temporal boundaries” of their tasks (Wrzesniewski et al., 2013). This can occur by adjusting the form or number of their daily work activities (Wrzesniewski & Dutton, 2001). Relational crafting is when an employee adjusts the boundaries of the ways in which they interact with others at work or which colleagues they work with to perform their jobs. Finally, cognitive crafting is when an employee reframes the cognitive boundaries of their jobs, thereby adjusting the meaning or purpose of their work tasks and relationships and changing the way that they view their jobs (Wrzesniewski et al., 2013). People may undergo one or multiple types of job crafting, and these changes can be obvious or subtle, as well as small changes or big changes (Wrzesniewski & Dutton, 2001). Because job crafting is somewhat abstract and can therefore be done in numerous ways, Singh & Singh (2016) conducted a study to better understand how it is done in practice by keeping a daily diary of employee activities while interviewing employees in India. They identified that employees perform job crafting by adjusting work tasks, adjusting work relationships, or adjusting work perceptions. Their findings resonate with Wrzesniewski & Dutton’s (2001) description of job crafting.

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17 Job crafting is applicable to all tiers and types of employment, to some degree or another (Wrzesniewski et al., 2010). Different situations/contexts enable different types and levels of job crafting a work place, with some moderators of the motivation to job craft being the employee’s perceived ability to do so, their perceptions of their own work, and their motivational orientations (Wrzesniewski & Dutton, 2001). This is a brief summary of these moderators and their restrictions from Wrzesniewski & Dutton’s (2001) work: The motivation to job craft is most likely to occur when the employee feels that he/she has the option or freedom to do so. Restrictions, however, of this perceived ability to job craft, can come from the level of task interdependence that the employee’s work entails. Employees, whose tasks rely on the tasks of others and, therefore, other people’s timings, are much more restricted to job craft than those who are not. These restrictions can also come from how closely supervised and/or controlled employees are by their superiors, in that employees who feel that they have more autonomy will have a higher perceived ability to job craft than those who do not. In terms of work and motivational orientations, research suggests that people tend to have one of the following associations towards their work: seeing it as a job (work is for financial reward, not fulfillment); career (focusing on advancement); or a calling (work is about enjoying fulfillment/contributing something socially useful). The way that an employee perceives how to alter their work and what to alter in their work, if anything at all, depends on which association they have towards their work. Also, the intrinsic motivations (doing the work for the sake of the work) or extrinsic motivations (doing the work for some other reason) that an employee may have generally, can also play a role in this. In sum, these aspects of the job and these aspects of the employee influence the employee’s motivation to job craft, what the employee’s behaviors in job crafting are, and the relationship between them.

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18 In Wrzesniewski & Dutton’s (2001) early research, they state that job crafting affects both the meaning of work and the work identity of the employee. They differentiate meaning to be how employees understand and frame the purpose of what they do and what this achieves and work identity to be how employees define themselves in the workplace. They are, by definition, connected to one another, as well. This is because when an employee changes the framing of their work purpose (the meaning,) they also change the way they perceive themselves as the person executing this work (work identity). In sum, employees that job craft are actively molding and redefining the different attributes of their job description (tasks, relations, and cognitions) in order to create a different job by affecting the meaning of their work and their work identity (Wrzesniewski & Dutton, 2001). In their paper, Wrzesniewski & Dutton (2001) differentiate job crafting from several other organizational psychology concepts and tools, but for the extent of this paper, the distinction they made between job crafting and job design is highlighted: the job design concept focuses on how employees experience their jobs when their task elements are not subject to change but are rather static whereas job crafting focuses on the changes employees are making in their jobs in order to revise the meaning of their work. The job design concept focuses on the connection between employees being satisfied with their job and to taking on more tasks; the job crafting concept focuses on the connection between employees altering their tasks, relations, and cognitions of their work to create a more satisfying work experience.

Wrzesniewski & Dutton (2001) also identify three motivations for job crafting: the employee’s desire to assert some control over their work to avoid alienation from it, the employee’s desire to create a positive self-image, and thirdly, the employee’s need to connect with others; all three of which being natural human desires/needs. This is not to say that all employees are motivated to fulfill these three needs; those employees who feel that these needs are met in other parts of their lives or who feel that their jobs already meet these needs

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19 will not necessarily seek to job craft. Job crafting will most likely occur from employees who feel that these needs have not been met.

Most of the aforementioned information on job crafting has been based off of Wrzesniewski & Dutton’s paper in 2001 because it was the introduction to the job crafting model and, therefore, the basis of research on job crafting since then. At the time of publication, Wrzesniewski & Dutton (2001) claimed that job crafting can serve the employee but is neither necessarily positive nor necessarily negative for the organization. Their main focus was on the benefits for the employee, which they considered potentially significant. Since then, however, some of the research has shown that job crafting can contribute to the positive well-being of an employee as well as positively influencing work engagement and performance (Wrzesniewski et al., 2013). Employee engagement, or the voluntary effort brought forth by employees to really engage in their work by spending extra time, developing and using more skill sets, and investing energy, is linked to employee retention. The efforts that employers put into retaining their valuable employees must also be put into engaging them, because this can also lead to better financial performance (Frank et al., 2004). Wrzesniewski & Dutton (2001) state that managers can only impact the job crafting process by employees indirectly. This is because managers can affect the context in which the employee is either enabled or disabled to job craft but not the actual job crafting itself or the extent of it. Nonetheless, managers can encourage/discourage job crafting from occurring by providing incentives or rewards or by organizing the work in such a way that makes job crafting easier/possible or difficult/impossible. Additionally, managers can impact the usefulness of the job crafting, by making decisions to either include employees in conversations about the organizational strategy or not. By including them, employees might craft in certain ways that align with the organizational strategy (Wrzesniewski & Dutton, 2001). This resonates with the concept of market orientation, a concept discussed by Narver

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20 & Slater (1990) that focuses on the type of organizational culture that produces superior value for customers and, therefore, superior financial performance for itself. Their paper discusses three behavioral components of market orientation: customer orientation, competitor orientation, and inter-functional coordination. The inter-functional coordination states that the proper coordination and utilization of company resources (including information about customers and competitors) creates superior value and, therefore, any point of the value chain should be viewed as an opportunity to create value for the customer. That means that an employee who influences the value chain can also create value. This suggests that, because of this, managers who include their employees in conversations about the strategic goals and visions of the company could indirectly influence employees to craft in certain ways that enhance those goals and visions and help them help themselves in better contributing to the value chain.

Studies of organizations of all sizes have shown that by job crafting, employees can align their work with their interests and are therefore more satisfied with and engaged in their work (Huss, 2016). Below are some examples of job crafting effects.

A quasi-experimental field study conducted in a Dutch police district showed that job crafting does, in fact, allow employees to build a motivating work environment as well as benefit their own well-being (van den Heuvel, Demerouti, & Peeters, 2015). In a survey of engineers at a manufacturing organization, results revealed that job crafting enhances an employee’s job satisfaction and commitment levels as well as increases individual performance and decreases absenteeism (Wrzesniewski et al., 2013). In another study of salespeople in a large company, it was found that more than 75% of employees were engaged in job crafting which positively correlated with their quality of self-image, perceived control, and readiness to change (Lyons, 2008). Job crafting has also been shown to occur as a group effort, which led to better work quality and to higher levels of individual organizational commitment and job satisfaction

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21 (Leana, 2009). Therefore, since job crafting’s introduction in 2001, research has shown that the concept can indeed be positive for the organization, as well, by positively affecting the employees’ work experiences and work performance.

Furthermore, organizations put high value on proactive employees, rather than employees who receive a set of instructions and perform them. This is because the proactive employee can potentially contribute large benefits to the organization, and this is done by employees shaping their own work lives and tasks with innovation, through such a tool as job crafting. When employees are involved in talks of the organizational strategy and goals, they then have the foresight to make adjustments in their work tasks and work relationships that both benefit them, personally, and the organization (Singh & Singh, 2016).

Vogel et al. (2016) acknowledge the “value incongruence” that can occur in organizations. This “alignment of employee and company values,” or lack thereof, is a concerning issue for management. According to their research paper, there has been much emphasis on the benefits of having and the need to have employees that “fit” in an organization, but not much emphasis has been placed on resonating values between the employee and organization. By studying different types of organizations and industries, they have found that job crafting is one of the things that can help counter the negative effects of value incongruence with regards to employee engagement and job performance. Moreover, Mattarelli and Tagliaventi (2015) have found, in their research, how the misalignment of work with professional identities (a strong source of job dissatisfaction) relates to offshore professionals, and that job crafting tends to be an employee’s defence towards this misalignment. Put simply, employees need to rethink what their work tasks are, who the people they work with are, and the way in which they think about their own work (Huss, 2016).

The work put forward by Wrzesniewski & Dutton in 2001 proposed that employees are capable of being active designers of their jobs by job crafting. They point out that, though job

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22 design theories place employees in a passive role, their job crafting model suggests that employees are changing aspects of their jobs, processing the feedback from these changes, and using that feedback to further change aspects of their jobs, when they are job crafting. Their model also suggests that employees play an active role in shaping the meaning of their work, so long as their environment conditions enable them to. Even undertaken activities that seem like they are extra or additional activities do contribute to the evolving work identity processes that employees go through.

In terms of practical use, Wrzesniewski & Dutton (2001) acknowledge that job crafting takes creativity and effort. They suggest that raising awareness that it occurs to socialization and training programs may be helpful. Additionally, they suggest that for organizations that are focused on growing their employees’ jobs, or developing their employees, there should be acknowledgement and support of job crafting. The authors also acknowledge that certain constraints may be in place that can limit the extent or possibility of job crafting: structural, economic, occupational status, standards, prestige, and certain requirements, as well as organizational values and structure.

2.3 Talent Attraction and Retention

A company’s ability to attract the right talent is considered crucial, as it is one of the main determinants behind company success (Ndweni, 2015). Many organizations are concerned about the ever-growing lack of skilled labor across the globe. There are many reasons for this, including population aging, as well as factors like economic migration, globalization, entrepreneurial practices (such as outsourcing,) and educational systems not preparing the workforce with needed skill sets of the future (Allen et al., 2010). Several of these factors are also impacting technology-based start-ups, as referred to in section 2.1. But because the need for technology skills/advanced skills sets is ever growing and competitors also now have online access to a company’s top talent, human resource management is facing a challenge

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23 never faced before (Gallaugher, 2016). Human resource management plays an important role in a start-up, by finding and retaining skilled employees. Any person who influences connection between the business model and the business processes is a source of competitive advantage for a company, but especially for a start-up (Lueg, Malinauskaite, & Marinova, 2014).

Consequently, employer branding has risen to board level in many companies. Employer branding is the initiation taken by leaders to strategically brand what they offer, as a workplace, to potential hires, and these offerings coincide with the desires of those potential hires. Companies with the best employer branding tend to be the companies that are most likely to attract top talent, which allows them to remain competitive and become industry leaders. Technology and company assets are not as valuable as human capital and their skill sets, as the former can be duplicated and the latter not so easily (Ndweni, 2015).

When examining what makes a start-up attractive to potential employees, Moser, et al. (2015) found that, contrary to literature focused on established organizations, people find a functional employer brand attribute (start-up sense of employee well-being) had the strongest effect on start-up attractiveness. However, start-ups have the disadvantage, compared to established competition, of having to operate under levels of high risk, uncertainty, as well as limited public recognition. They also found that the “smallness” and “newness” of start-ups lead to the issue of legitimacy. This is one of the reasons a shortage of labor will be one of the main factors hindering the growth of start-ups. Additionally, human resource management, in nascent businesses, face problems such as developing the identity of the organization, establishing the legitimacy of the business, and creating an attractive organization image (Moser et al., 2015). Job crafting can have positive effects on employees’ well-being, so communicating this as part of a start-up’s employer brand attribute may help

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24 in attracting skilled talent (Wrzesniewski et al., 2013; Berg, 2010; van den Heuvel, Demerouti, & Peeters, 2015; Singh & Singh, 2016).

The lack of research on organizational attractiveness of nascent ventures is addressed by Moser et al. (2015) and they propose six employer brand attributes that could lead to higher levels of organizational attractiveness among start-ups: start-up sense of well-being for employees, attractiveness of location, start-up innovativeness, opportunities for employee impact on start-up success, founder legitimacy, and start-up legitimacy. However, the strongest effect came from start-up sense of employee well-being and least strong was founder legitimacy. Their research contradicts that of larger organizations, which usually find that symbolic brand attributes (of a subjective/intangible nature, e.g. perceptions of the company) to be more prevalent than functional brand attributes (of an objective/concrete nature, e.g. location) in organizational attractiveness. Their research also suggests that job applicants with a need to be creative, and are independent and goal-setting, perceive a start-up that has an innovative image and opportunities for individual contribution to success as more attractive (Moser et al., 2015). As job crafting requires creativity and gives employees the opportunities to reform their work in ways that could be beneficial to the organization, thereby also allowing impact on the success of a start-up, start-ups communicating the possibility to job craft to potential hires could result in employee attraction (Wrzesniewski & Dutton, 2001; Wrzesniewski et al., 2013; Singh & Singh, 2016).

It is important to note that employee attraction is of equal importance to employee retention (Ndweni, 2015). Employee retention is crucial to all kinds of organizations because the loss of valued members of the team results in high costs, loss of knowledge, and work disruptions. There are two types of employee turnover: voluntary and involuntary, with the former being initiated by the employee and the latter by the employer. Within the context of voluntary turnover, there are also two types: dysfunctional (harmful to the organization, e.g. an

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25 employee with difficult skill sets to replace) and functional (disruptive but not necessarily harmful to the organization, e.g. an employee with skill sets that are easy to replace) (Allen et al., 2010). When this thesis refers to employee retention, preventing dysfunctional voluntary turnover is what is meant; because this kind of turnover refers to the employees an organization would prefer to keep and is also harmful to organizational success (Allen et al., 2010). Employee turnover that is unexpected and voluntary can also cause low employee morale, another critical issue for an organization (Frank et al., 2004).

Organizations across the globe have had to become flexible in order to both attract and retain talent. A flexible organization is one that has the ability to reconfigure their resources and activities promptly in response to the demands of the environment (Stavrou, 2005). Doing so has become a strategic necessity in order to remain competitive in the market. In order to accommodate organizational flexibility, human resource management needs to innovate practices, such as the organization of work and work-life-balance programs (Stavrou, 2005). According to data of the employee branding of South African companies, it was found that the one of the biggest priorities for both students and professionals was work-life balance. It was also found that the millennial generation, in South Africa, look for jobs that will challenge them as well as jobs in which they feel they are adding value to something and that adds value into their lives (Ndweni, 2015). Money is not the sole motivator for retaining happy employees (Berg, Grant, & Johnson, 2010,) so management has a choice: find another way to keep employees pleased with their jobs and remaining competitive, or lose their talent to competitors (Gallaugher, 2016). Compensation can play a role in luring employees out of their current jobs and into new ones, but according to the research conducted by Allen et al. (2010,) this is not a main cause of employees seeking out other employment opportunities. They discuss the concept of organizational equilibrium, which states that employees will continue to participate in their organization so long as what the organization offers as

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26 incentive/encouragement to do so is equal to or greater than what the organization expects as contribution. These incentives can be pay or other tangible rewards but they can also be intangible rewards like better working conditions or future career advancement opportunities. Reasons employees stay are also valuable to understand. Allen et al. (2010) discuss three reasons from their research that employees stay; links, fit, and sacrifice. Links are the connections that employees have with other people, within and outside the organization. Fit is the compatibility between the employee and their job and the organization. Finally, sacrifice is what the employee would be giving up by leaving their job. Those employees with many links within the organization and their community, with a better fit within the organization, and who would be sacrificing more by leaving than if they stayed at the organization, are the employees more likely to be retained (Allen et al., 2010). All three of these reasons can potentially be positively influenced by job crafting. By relational crafting, employees can potentially develop many links within and outside the organization. In terms of fit, the use of one or some of the three types of job crafting can be directed towards improving the fit of an employee in their organization by allowing the employee to turn a static and non-customized job description into one that meets their needs and motives as well as create a positive meaning and work identity for them, as described by Wrzesniewski et al. (2013). Lastly, sacrifice such as a positive work environment (example given by the authors,) can also be influenced by job crafting. A positive work environment could be one that allows for the freedom to job craft, which results in more meaning, and might not be possible in other places of employment (Allen et al., 2010).

In a series of interviews conducted with top leaders of 20 fast-growth companies in the United States (start-ups transitioning into growth companies,) Zingheim et al. (2009) raised questions about talent management in such a challenging time period. They found that executives of these fast-growth companies are radically adapting their compensation policies,

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27 reward practices, and retention strategies to align with the needs of talent-management. Whatever practices that were effective during their early phases, but are no longer proving to be so, have been discarded. They’re doing this in order to allow their company to better add value and grow, which is essential to their survival. These companies, several of which are technology-based, experienced revenue growth as well as workforce growth in the same three-year growth period studied. In terms of the human resources perspective, practices occurring in the early periods (such as the hiring of “unstable” employees, meaning those that freelanced or those that were transient employees) were lagging behind their fast growth and becoming ineffective. Start-up hiring strategies, such as offering stock options, were also not retaining the skilled employees that the company needed for survival. The leaders of these companies needed a more stable workforce to complement that fast growth.

Zingheim et al.’s (2009) research emphasized that talent retention is vital for start-ups and their ability to transition into growth companies. Those employees who support the core competencies of the start-up and resonate with their future business model must be retained, and for these studied companies, those employees were the ones who possessed high technology skills, such as engineers, or those who had skills in product development and marketing. The interviewees were in consensus that employee engagement is crucial and they work on improving employee engagement. However, they were not in consensus about the importance of employee satisfaction, with some finding it important and some not (Zingheim et al., 2009). Several studies, as mentioned before, have found that job crafting can help with both employee engagement and employee satisfaction (Wrzesniewski et al., 2013). The interviewees also found that manager or supervisor’s role to be relevant to recruitment, retention, and development, by leading, coaching, and engaging people with the business model. They placed importance on training and development, particularly for technology roles, to keep their skills up-to-date, develop more skills, and even advancing their

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28 educational degrees (paid for by the company). This helps retain key talent. Additionally, they found that career opportunities played a key role in retaining talent; this refers to employees’ opportunities to grow their career path as well as developing their career with practices like job rotation (Zingheim et al., 2009). The idea of managers being able to influence retention and engagement is relevant to the application of job crafting. Wrzesniewski & Dutton’s (2001) findings suggested the likeliness of an employee to be motivated to job craft is determined by their perceived ability to do so (e.g. company culture, management’s openness towards it, etc.). Because job crafting can lead to improved employee engagement (Wrzesniewski et al., 2013) which is linked to employee retention (Frank et al., 2004) and because job crafting can provide employees, with the desire to grow their careers, with ways that support that path (Wrzesniewski & Dutton, 2001,) management’s awareness of job crafting and their role in encouraging employees to job craft might be useful for employee retention. Therefore, this thesis postulates that job crafting could be a useful tool for employees in start-ups to engage in, because of previous studies finding positive correlations with countering similar issues.

These leaders acknowledged that this talent will always go for the best option offered for them, so they believe that leaders of these companies must do two things: 1) understand and act on the balance between what they can offer and what other companies can offer (tangible and intangible rewards) to their employees and 2) make their talent feel appreciated and important, feel part of the company and its future, and feel like they are contributing value (Zingheim et al., 2009).

This study focused on the challenge of remaining competitive and growing as a business while simultaneously retaining and stabilizing the workforce, focusing on the high-performing, skilled talent (Zingheim et al., 2009). Though these companies are based in the United States, this challenge facing them resonates with the ones facing start-ups in the

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29 Netherlands. It is relevant because aiming for growth in revenue and employee number is one of the key criteria of a start-up (Ripsas & Hentschel, 2015) and as one-third of Western European start-ups don’t survive their second year of existence (Weele et al., 2016,) some of the ideas from this study on how to best retain skilled talent might be useful for those start-ups determined to grow.

2.4 Job Resources

Demerouti et al. (2001) describe job resources as any of the physical, psychological, social, or organizational aspects of a job that contribute to: (a) being functional in achieving work goals; (b) reduce job demands; and (c) stimulate growth and development. Job resources include job control, qualification potential, participation on decision making, variety of tasks, and support from both within and outside the organization. Job resources have been found to be a major predictor of work engagement, in that the more job resources that are available, the more likely work engagement is to occur (Vera et al., 2015). Work engagement is an ongoing state of mind in which an individual feels positive fulfillment about their work. This state of mind is characterized by the amount of energy and effort that they willingly put into their work (vigor,) the positive connection and the involvement they have with their work as they feel challenged and enthusiastic about it (dedication,) and their work earning their full concentration and focus, happily (absorption) (Vera et al., 2015).

Demerouti et al. (2001) believe that when job resources are lacking and extreme job demands are occurring, employees cannot achieve their goals and therefore are likely to become less motivated and withdraw from their jobs. In their job demands-resources model of burnout, they explain two phases that occur when employees experience burnout: first, exhaustion as a consequence of extreme job demands and, second, withdrawal as a consequence of a lack of resources that further cause difficulties in meeting job demands. This is significant because withdrawal leads to disengagement from work.

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30 In this thesis, job resources become relevant. Because those individuals who wish to job craft tend to do so only if they perceive the opportunity to (Wrzesniewski & Dutton, 2001,) the author of this thesis predicts that certain job resources must be available for employees to job craft in order to become engaged and remain at their current place of employment, and that these job resources facilitating the job crafting in start-ups are what help give them a competitive advantage compared to more traditional companies. In other words, this paper predicts that certain job resources at a start-up will act as moderators linking job crafting to employee attraction and/or employee retention. The suspected moderators (job autonomy, social support, job accountability, and psychological empowerment) are discussed in the following subsections.

2.4.1 Job Autonomy

Job autonomy is defined as the extent of the freedom, independence, and discretion an employee has in scheduling their own work and the methods in which their work is carried out. It has been found to lead to increased work engagement (Vera et al., 2015). As referred to in chapter 1, job autonomy is already associated with job crafting, in that the way one crafts one’s job rests with the individual and gives them control over their job. Although people tend to assume that job crafting can only occur by employees in high autonomy jobs, it has also been shown to also occur by those in low autonomy jobs (Wrzesniewski & Dutton, 2001). Because of this misconception, however, the author of this thesis predicts that if potential hires perceive that job autonomy (as a job resource) is present, this will strengthen their perceived ability to job craft in said company and, therefore, view the company as attractive.

Wrzesniewski et al. (2010) found that although people in all ranks of an (traditional) organization could engage in job crafting, those in lower ranks needed to change the expectations and behaviors of others before being able to job craft, and those in higher ranks

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31 needed to change their own expectations of the ways they should spend their time at work. At start-ups, especially young ones, ranks tend to be almost non-existent and expectations tend to be very unclear and flexible. This is because a strict hierarchy is normally not used, all employees influence the start-up’s evolution, employees are usually expected to learn a bit about everything and adapt quickly, and there is usually plenty of room to grow into the company and into new and different roles (Dzhingarov, 2016). Therefore, it is predicted that if a start-up offers job autonomy and continues to offer job autonomy, as it develops, this will strengthen and facilitate an employee’s ability to job craft, which will result in retention.

2.4.2 Social Support

Another job resource that may be important is social support, the positive and helpful assistance and interaction provided from superiors and co-workers in a workplace (Vera et al., 2015). Several studies have shown different results of social support. Social support can lead to increased employee well-being and better stress-coping methods (Kaufmann and Beehr, 1986). Additionally, social support from superiors can be seen as superiors facilitating further development (Blancero et al. 1996; Langford et al. 1997). Social support also gives employees the impression that their workplace has learning opportunities (Van der Heijden et al. 2010) and contributes to their professional growth and development (Halbesleben and Rotondo, 2007). Vera et al. (2015) found that social support is not only a job resource but can also act as a moderator between job autonomy and work engagement.

Because of the stressful environments technology-based start-ups operate in and the lack of funding, capacity, and clarity that they may have in early stages (Talaulicar et al., 2005; van Weele et al., 2016,) this paper predicts that social support will play an important moderating role between job crafting and employee retention. That is, employees looking to job craft or those currently job crafting, to develop work meaning/work identities within the turbulent environments that they work, will do so/continue doing so if they feel that social support is

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32 present to assist them with that. As a result of social support assisting their ability to job craft, and thus also being more engaged in their work and achieving an increased sense of well-being, this will result in employee retention.

2.4.3 Job Accountability

Hochwarter et al. (2005) discuss job accountability having both an objective view and a subject view. The former refers to the formal or regulatory mechanisms in place that assign and monitor accountability to an individual. Individuals may perceive these mechanisms and objective conditions differently; therefore, the latter (described as felt accountability) refers to the implicit or explicit expectation that the decisions or actions an individual undertakes will be considered important and evaluated by salient people, who believe that the individual can either be potentially rewarded or reprimanded. Job accountability has been shown to predict increased levels of involvement and increased participation in citizenship behaviors. However, an excess of felt accountability can also lead to negative outcomes.

Hochwarter et al. (2005) found that when individuals perceived job accountability as high, this was accompanied with high tension. Organizations continue to expect accountability from their employees and doing so without providing the adequate resources will lead to high tension. Those individuals in decision-making roles assume that employees desire a great deal of accountability, whereas Hochwarter et al. (2005) found that not to be the case. Instead, they found that moderate levels of accountability are desired; so to not overwhelm employees but still give sufficient accountability to incite certain desired behaviors. Lastly, they found that when accountability is too low, meaning employees are experiencing low levels of stimulation; this resulted in unfavorable effects on employee attitudes. Therefore, Hochwarter et al. (2005) suggested that keeping employees moderately engaged with challenging work could lead to reduced tension and, therefore, reduced employee turnover.

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33 Start-ups operate in environments with high levels of risk, uncertainty, instability, and often a lack of initial funding and capacity (Moser et al., 2015; van Weele et al., 2016). Because of this, high levels of job accountability are implied in the nature of a start-up. Therefore, this paper predicts that that job accountability will actually act as a moderating factor between job crafting and employee attraction, in that the implied job accountability will strengthen the perceived ability to job craft, making the start-up more attractive. This is based on an assumption that the skilled talent who are seeking to work in, and would fit in, a start-up culture, are those who perceive high levels of job accountability as positive and, therefore, are looking to work in that sort of environment and are looking to be able to job craft as well. Additionally, if an employee engages in job crafting and this leads to successful results, their job accountability for their success might act as a moderating factor to employee retention. Their ability to claim responsibility for their successful results, of which the success of the start-up might depend on, might result in employee retention as their efforts will not have gone unnoticed nor their credit been given to someone else. This is particularly relevant to Western cultures, like the Netherlands, where the competencies of the individual are valued over the competencies of the group (Fock et al., 2011). Furthermore, the nature of job accountability induces higher work performance and stimulation, which in turn may induce job crafting, especially if previous experience has taught the employee that this results in successful outcomes. In other words, the author of this thesis predicts that when the skilled talent feels that they are accountable for their work, they could be more likely to engage in job crafting if they feel that this will produce better or quicker results, and, therefore, their ability to job craft to produce positive results could also lead to employee retention.

2.4.4 Psychological Empowerment

Lastly, the author of this thesis expects psychological empowerment (also called empowerment) to act as a moderating factor. When the term empowerment began to surface

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34 in the organizational sciences, empowerment was recommended to be viewed as the motivational processes in employees and defined as increased feelings of self-efficacy. Therefore, interventions could occur that allow employees to feel that they are competent in completing their tasks. The combination of the empowering effect of self-efficacy and the empowering interventions resulted in an empowering experience: increased “initiation and persistence of subordinates’ task behavior” (Thomas & Velthouse, 1990).

Thomas & Velthouse (1990) expanded this approach by characterizing empowerment as changes in task assessments (cognitive variables) which determined employees’ motivation. Instead of defining empowerment as a motivation, they defined it as a type of a motivation: intrinsic task motivation. According to them, four task assessments encapsulate empowerment: the value of their work, the impact of their work, their own competence, and the choice/control over their work. Their model of empowerment depicted it as an ongoing cycle, in that environmental events provide employees with information about the consequences of current task behavior and the conditions and events relevant to their behavior in the future. This information, provided by the environmental events, then shapes employees’ task assessments, which then motivate and sustain their behavior. This behavior then influences the environmental events, and thus the cycle begins again. Therefore, empowerment is not only influenced by environmental events but also by how the events are interpreted by the employees.

Empowerment that allows employees more decision-making abilities and flexible power over the ways in which they perform their work is considered an important management tool (Fock et al., 2011). Empowerment has been found to associate with several outcomes, such as job satisfaction, organizational commitment, and job performance (Kim & Kim, 2012). If an individual feels that their work has value, they are competent to do their work, they have control over their work, and their work has an impact, this can lead to psychological

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35 empowerment. The effects of empowerment, however, are dependent on cultural values and norms, as well as an individual’s power distance value. Western cultures tend to be individualistic and Asian cultures tend to be collectivistic. The former values the attributes and competencies of the individual while the latter values team work and views performance as a result of a team effort and team responsibility. The effects of empowerment tend to be more positive in Western cultures and less so in Asian cultures (Fock et al., 2011).

This thesis assumes that start-ups operate in environments that innately support low power distance values; that is, they support a more equal distribution of power, a flatter organizational structure instead of a hierarchical one, participation in decisions, and that they care less about titles and status (Dzhingarov, 2016; Ng et al., 2011). This is based on the nature of a start-up: a start-up tends to emerge with a disruptive business model that provides them with a competitive advantage over traditional organizations. They are innovative, problem-solving, and agile; and the more established organizations struggle to compete with them in terms of speed and price. They operate in such a way because their organizational cultures encourage flexibility, an open exchange of ideas and input (regardless of title or years of experience,) an openness to innovation and change, and free flow of information (Kwiatkowski, 2016).

As this thesis is exclusively focusing on the effects of job crafting on employee attraction and employee retention in tech start-ups based in the Netherlands, a western country with individualistic values, this thesis also assumes that the effects of psychological empowerment would be positive in a start-up environment. Therefore, the author of this thesis predicts that psychological empowerment will act as a moderating factor in connecting job crafting to both employee attraction and employee retention. Because of the nature of start-ups and their needs to be innovative and agile, and because psychological empowerment is derived from an individual’s work place, through which an individual perceives their choices in shaping their