UFHRD EUROPE 2012; 23 – 25 MAY 2012
Frontier Workers in Luxembourg - The Rationale behind the phenomenon
A study in Strategic Human Resources Management
Eva Wuellner, HR Director Lindab, Route d‘Ettelbruck, L-9230 Diekirch
[email protected]
27.03.2012
Paper for the Doctoral Workshop Stream
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Table of Contents
1.
2.
3.
4.
5.
6.
7.
Abstract……………………………………………………………………….2
Key words…………………………………………………………………….2
Research Methodology……………………………………………………..2
Key findings to date………………………………………………………....6
Literature review……………………………………………………………..7
Limitations of the research…………………………………………………12
The next steps……………………………………………………………….12
References……………………………………………………………………………13
List of Abbreviations
BCG
Boston Consulting Group
EUROSTAT
European Statistical Institution
GDP
Gross Domestic Product
GTM
Global Talent Management
IBA
Interregionale Arbeitsmarktbeobachtungsstelle = Interregional Labor
Market Monitoring Agency
IHRM
International Human Resources Management
INSEE
Institut National de la Statistique et des Etudes Economiques =
French Statistical Institute
MNE
Multinational Enterprises
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1. Abstract: The research problem
The topic appears in the framework of International Human Resources Management
(IHRM) and is dealing with the phenomenon of frontier workers in Luxembourg.
Luxembourg is, with the exception of Malta, the smallest of 27 members of the
European Union. As one of the leading investment and financial centres worldwide,
employing 142 different nationalities, it is by far the richest country in the European
Union in terms of GDP per capita. Luxembourg stands for attractive fiscal policy,
good working environment, low taxes and high social security and is seen as an
excellent choice for a career move (Business review 2011:36).
45% of workplaces in Luxembourg are occupied by frontier workers, commuting
every day from the border countries Germany, France and Belgium.
The thesis aims at exploring the rationale and motivation behind frontier workers by
using qualitative approach. Semi-structured, in-depth interviews with selected
German, French and Belgian frontier workers of multinational companies
headquartered in Luxembourg are to be led.
The research is particularly interesting and important as so far there was only
quantitative research done in this field.
The object is to answer the following research question:
What is the rationale and motivation behind frontier workers in Luxembourg?
2. Key words
Frontier worker / cross-border worker, Talent Management, Globalisation, Mobility,
Diversity, International Human Resources Management (IHRM)
3. Research Methodology
Why do we need research methods in science? Following Blinkert (2009:15ff),
human beings only possess few hereditary methods of knowledge. Hence, we can
draw conclusions only on the basis of visual relations. Our common knowledge is
based upon other interests like habits or utility. Therefore, research mainly lies on
quality criteria like objectivity, validity, reliability or generalisation.
Research as defined by Remenyi is “a scholarly enquiry involving a careful and
diligent research” (Remenyi 1998:289). In business and management, the empirical
approach prevails, although research´s nature can be either empirical or theoretical.
According to Collis and Hussey, research design is “the detailed plan for conducting
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a research study” (Collis and Hussey 2003:355). Silverman states that “like theories,
methodologies cannot be true or false, only more or less useful” (Silverman 1994:55).
Research design according to Thietart “is the framework through which the various
components of a research project are brought together: research question, literature
review, data, analysis and results” (Thietart et al. 1996:111).
The researcher in business and management in first place needs to understand
which personal paradigm one follows and its basic believe, because this will decide
upon the future course of the entire research project (Collis and Hussey 2003:251).
Having chosen one´s topic, the researcher then needs to deliver a research proposal
in which the research design is laid down. It consists of clarifying the right research
questions, listing available literature, thoughts about how data should be collected
and analysis of results.
According to Saunders (2003:2) “the research methodology refers to the theory of
how a research is undertaken.” In empirical research, the research design guides the
researcher. Having identified the research problem or question, it is of outmost
importance for the researcher to select a research strategy (Thietart et al. 2001:60).
The process of the research can be either of qualitative or quantitative nature.
Whereas qualitative research is related to the phenomenological paradigm,
quantitative research is linked to the positivist paradigm.
Saunders (2003:597) explains phenomenology as “research philosophy that sees
social phenomena as socially constructed, and is particularly concerned with
generating meanings and gaining insights into those phenomena”.
According to him, qualitative research in general follows induction building theory.
The results of a qualitative study in general are outlined within a written statement or
a proposition derived from qualitative data. Qualitative Research according to Yin (in
Tucker, Powell and Meyer 1995) is the most appropriate method for someone trying
to understand the characteristics and components of a phenomenon when theorizing
around it as it allows deeper insights into the subject of study as a result of building
an understanding of their experiences relating to the particular phenomenon (Tucker
et al. 1995). It has also been defined as “any kind of research that produces findings
not arrived at by means of statistical procedures or other means of qualification”
(McLeod, 1994:77). Denzin and Lincoln (1994) describe qualitative research as
follows: “Qualitative research is multi method in focus, involving an interpretive,
naturalistic approach to its subject matter.” Creswell’s definition of qualitative
research and its characteristics add the concepts of exploring “a social or human
problem” and the researcher building “a complex, holistic picture” by analyzing
words, reporting detailed views of informants, and conducting the study in a natural
setting (1998:14-16). Gephart states that “Qualitative research starts from and
returns to words, talk, and texts as meaningful representations of concepts”
(2004:455). It is based on evidence that is not easily reduced to numbers (Remenyi
1998). There are three ways for data collection in order to get output from qualitative
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findings: in-depth, open-ended interviews; direct observation and written documents
(Patton 2002:4).
The method employed to conduct my study is an in-depth exploratory approach,
focused on gathering qualitative data from a specified group, also named focus
group. Carson 2001, cited in Saunders (2003:344), describes the term focus group
as the one used “to refer to those group interviews where the topic is defined clearly
and precisely and there is a focus on enabling and recording interactive discussions
between participants.” The participants have certain common characteristics and are
able to share their experiences and point of view with the others (Krueger and Casey
2000 as cited in Saunders 2003). The researcher has the role of ´moderator´ or
´facilitator´.
Focus group research is an approach “from collecting evidence from a highly
specialized group of individuals” (Remenyi 1998:53) which should consist of at least
four persons. It is similar to in-depth surveys with similar positivistic and
phenomenological implications. Such an approach is often used as collection
technique for management research. It is “a useful way of obtaining evidence from
experts in an intense or concentrated way” (Thietart et al. 2001:53). Qualitative
evidence uses phrases in order “to describe situations, individuals, or circumstances
surrounding a phenomenon” (Remenyi 1998:121). Object of focus group interviews is
to “get high quality data in a social context where people can consider their own
views in the context of the views of others” (Patton 2002:386).
By using semi-structured interviews, the researcher´s target is to gradually progress
in relation to the research question (Thietart et al. 2001). I furthermore plan to follow
the logic of triangulation given the fact that there is not only one single method for
explaining the research problem, as stated by Denzin: “By combining multiple
observers, theories, methods, and data sources, [researchers] can hope to overcome
the intrinsic bias that comes from single-methods, single-observer, and single-theory
studies” (1989:307).
Kvale as cited in Cassell (2004:11) defines the qualitative research interview as “an
interview, whose purpose is to gather descriptions of the life-world of the interviewee
with respect to interpretation of the meaning of the described phenomena.” The data
“typically comes from fieldwork” (Patton 2002:4). Cassell identifies four steps needed
to lead qualitative research interviews: defining the research question, creating the
interview guide, recruiting participants and carrying out the interviews (2004:14).
My case study is cross-sectional with data to be collected in a certain period. Given
the exploratory nature of the study, it necessitates to lead face-to-face, in-depth
interviews with the Focus group members. The research questions are posed to
guide the empirical research methodology based on an “interview guide” (Patton
2003:343). Yin (2003:90) calls this approach “focus interviews”. Prior to the
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interviews, all questions are pre-determined and listed as a guideline, and are to be
used on each case.
I choose the phenomenological emphasis on how individuals (in this case the - to be
- interviewed frontier workers from Germany, France and Belgium) experience the
world to enter into the interviewee´s perspective and experience (Clark Moustakas
1994).
An interview guide including open questions, minimizing any source of influence for
the interviewees, shall lead through the meetings with about 60 minutes each. All
interviews have to be transcribed in order to facilitate the analysis of their content.
The intended audience of the study is an important consideration when compiling the
research methodology and qualitative research according to Marshall and Rossman
(2006), as the research focuses on contextual and real world issues and therefore
necessitates an “interactive and humanistic” (Marshall and Rossman 2006:3)
approach.
The target population of relevance for this study consists of approx. 12 interviews
with frontier workers of three nationalities, each four interviewees, of companies
established in Luxembourg: Bank, Insurance, Fund Administration, and Industry,
employing each at least ten cross border workers from the three nationalities listed
above at different function levels.
The selection of interviewees meets the following criteria:
 Employed by a global organisation
 A minimum of 2 years experience within their current job
 at least commuting to Luxembourg since three years and
 varied in age.
The interview is structured in a way to encourage a conversation focusing on a
number of themes with the intention to piecing together an intellectual puzzle (Mason
2002). Due to the personal and exploratory nature of the subject material, it is
necessary that the researcher develops a relationship of trust and respect with the
respondents. Interviews are to be hold at the interviewees’ company in a separate
meeting room in order for the researcher to gain insights into the environment and
context. Pre-testing is to be conducted prior to the in-depth interviews so as to be
comfortable with the interviewing and probing techniques and the data capturing
process.
The gathered data need to be reduced into manageable pieces. Patton (2002)
explains that the transformation of data into key findings does not follow defined
formula but requires guidance in the form of a coding frame that makes content
analysis more efficient, allowing the gathering of meaning in data. Miles and
Hubermann recommend to use a contact summary sheet as of the early step of data
analysis and to build up on these results for the next contact.
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According to Mason (2002), reliability essentially involves accuracy and consistency
of the research methodology. It is the ability to “obtain the same results if the
research were to be repeated by another researcher” (Collis and Hussey 2003:354).
In qualitative research, the reliability depends on the capability and ability of the
researcher to condense and analyze data (Miles and Hubermann 1984, cited by
Thietart 2001).
Validity in qualitative research is also described as the trustworthiness or credibility of
the process. Saunders calls it the “extend to which data collection methods
accurately measure what they intend to measure” (2003:492). In a phenomenological
paradigm, validity has to be high in order to “gain the full access to the knowledge”
(Collis and Hussey 2003:59). Yin (2003) demands multiple sources for evidence. In
this case, interviews, but also direct observation and taking notes will be the source.
I strive to work as accurate as possible to make sure that all findings are complete
and in order. The interviews are to be kept digitally and stored in an organized case
study database.
The scale of research is limited to the boundaries of Luxembourg with its straight
forwarded distances (North to South 80 km and West to East 34 km). Most of the
interview partners work in companies situated in the City of Luxembourg. Neither
travel costs nor costs for renting of rooms for the interviews will apply as all take
place in the interviewee´s company office. I use my company car to drive to the
interviews.
4. Key findings to date
A lot has been written about Talent Management and globalisation, whereas the
phenomenon of frontier workers, especially when it comes to Luxembourg, has been
researched mainly only on quantitative basis.
As there are more than 150.000 cross-border workers from the three neighboring
countries Germany, France and Belgium commuting every day to Luxembourg, this
is worthwhile analyzing more in details.
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The following picture gives an overview on the number of cross-border workers by
neighboring country:
Wage earners in Luxembourg from 1975-2011 (Source: STATEC)
One can see that the number of French frontier workers has risen very sharply year
over year, whereas the evolution in numbers for Belgian and German was more
moderate.
5. Literature review
The literature review aims at improving the “own personal knowledge on a subject”
(Collis and Hussey 2003:110). To start with, it should focus on key authors for the
subject under research. The researcher should be critical, draw conclusions on
models described and compare internal and external factors to finally come up with
identifying the gap and formulate the research question which should be relevant for
the research project. By critically reviewing the literature, the conceptual framework
will be the outcome.
Given that nowadays the flood of information is huge, one has to weight out whether
the information is relevant and supportive or not. Yin (2003) advises to carefully
review the literature in order to develop a sharp and insightful question about the
topic under investigation. Literature review is never completed, as there will be
additional papers issued until the final publication of the dissertation (Thietart et a.
2001). It should not only indicate a suitable problem to research but also help the
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researcher to find out about methods and approaches traditionally used in this field
(Creswell 1994). At the end of the literature review it should be clear to the
researcher what he or she wants to achieve in his or her research.
The subsequent literature review focuses on the key issues, themes and prevailing
thoughts around frontier workers / cross-border workers, Talent Management,
Globalisation, Mobility, Diversity and International Human Resources Management
(IHRM).
According to Baruch (2006), the contemporary literature around the above mentioned
topics points out to the fact that the labor market is dynamic and the system in which
we work is characterized by fluidity and constant change. Meisinger (2006) argues
that people have become a key component to business success. That theme also
comes through in a book from Cheese (et al. 2007).
Global competition and the demand for more specialized skills and knowledge have
emerged as the main drivers with the need for the labor pool to constantly strive to
raise the skills bar. Pringle and Mallon (2003) speak about the concept of boundary
less career which challenges the traditional concept of careers. Baruch states that
the “actual career or meaning of the career transcends the boundary of a single path
within a single employer” (2006:128).
The changes brought about by globalisation and the raising competitive factor in the
global economy has a direct influence on the workplace and the employees. Baruch
(2006) sees the modern day career as flexible and dynamic, mirroring the impact of
globalisation, where the knowledge worker or talent is of strategic importance and
value. The challenge in this globalised new world is that a job is no longer for life,
where individuals are becoming their own career managers and navigators, steering
their future career paths as they see suitable (Baruch 2006). Individuals are no more
isolated figures in the career development process but are embedded in the broader
interconnected individual, global and organisational domains. They are becoming
more personally conscious and self-concerned (Baruch 2006) as well as globally
mobile (Cappellen and Janssens 2005).
As Drucker (1994) explains, due to the nature of global competition the individual
needs to capitalize on knowledge and drive the transference of his knowledge within
and across organisations. This context puts the talent worker into a position where he
or she has greater choice and find organisations competing for their skills and
competences.
A global survey performed by McKinsey evidences the fact that no other global
tendency has ever been considered so important (McKinsey 2008). It shows that the
more and more global nature the competition for talents, the major will be the impact
on companies in the following five years.
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Evidence on Talent Management not only comes from primary data in literature, but
also from secondary sources like professional journals as the Human Resources
Management Review, Human Resources Development International, the HR
Magazine or Internet sources like cipd.co.uk.
In order to reference to most current trends in HRM, I plan to predominantly use
journal articles as main source of data.
A big variety of literature has been published on the topic of Global Talent
Management:
An article in Journal of World Business, published in 2010, is a good starting point for
literature review on this topic (Tarique, Schuler 2010: 105-108). The article reviews
literature regarding the topic of Global Talent Management, analyzes matters such as
the definition of the term GTM and the differences between IHRM and GTM. It
continues by providing an integrative framework on which further research can be
based. Research on GTM is categorized as still being in its infancy. The paper also
provides extensive recommendation regarding literature with a list of useful journals.
Another helpful introduction on globalisation and diversity is a study done by the
Boston Consulting Group 2011, called ´Creating People Advantage 2011’. According
to BCG, the current most critical HR topics are managing talent, improving leadership
development, transforming HR into a strategic partner and strategic workforce
planning. The current general mega trends are demographics, social media,
globalisation, diversity and work-life balance.
Talent management issues faced by MNEs are particularly the difficulties
experienced when moving management overseas. One big problem continues to be
the lack of support returnees receive. Companies which are good at managing their
expats earned significantly higher profit per employee. Rotating talent globally is very
important to promote cultural awareness and diversity (Guthridge and Asmus
2008:10-13).
When it comes to Luxembourg, there are plenty of data available on the labour
market, employment structure, and demography and frontier workers. Those data are
regularly published by the European Statistical Institution, EUROSTAT.
The Interregionale Arbeitsmarktbeobachtungsstelle (IBA = Interregional Labor Market
Monitoring Agency) issues brochures with key indicators for the so-called Greater
Region. This includes the two German states Saarland and Rheinland-Pfalz, as well
as the French region Lorraine and the Belgian Wallonie. The study gives an overview
of the extent and the structure of the cross-border stream in the entire region, as well
as the reasons for high employee mobility. It also contains topics such as residence
mobility, the overloaded and badly coordinated traffic infrastructure, language
problems and administrative obstacles. Further recommendations for action and
measures are compiled for the promotion of employee mobility.
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A recent study done by Löh (2011) examines the question, who are the frontier
workers in the Greater Region, how to characterize them and under which conditions
they work. The author comes to the conclusion that cross-border workers on average
are younger, better trained and male. Examined factors amongst others are
education, personal characteristics, size of business they work in, kind of occupation
and occupational group. The study deals with the entire Greater Region and not only
Luxembourg.
The French Statistical Institute (Insee = Institut National de la Statistique et des
Etudes Economiques, Nancy) published a survey about education and training in the
Greater Region. It describes weaknesses and differences of education systems in
the Greater Region, showing that it lags behind the European standard. But it also
reveals that high-qualified persons in large-scale enterprises more and more
participate in further education.
Deloitte in their recently published HR survey on global trends in Luxembourg state
that the general trend in Luxembourg is restrain, as the economical upturn is seen
with caution. Top priorities are recovery, business development, building customer
loyalty and innovation through new products. Regarding HR, the attraction and
retention of talent and high potentials/performers are valued the most. There are also
lacks in the existing HR systems. Retention is seen as a great challenge as turnover
is expected to rise. To combat this, companies plan to raise their attractivity,
especially through Employer Branding.
Wille, a German researcher in the field of sociology and cultural sciences, is the first
source found that specifically deals with the status of frontier workers in Luxembourg.
He states that cross-border commuters are an indispensible part of the
Luxembourgish work force. The study researches how Luxembourgish residents
regard cross-border workers and what status they give them. The result shows that
the Luxembourgish society has an ambivalent view on cross-border workers which
focuses on differences and the construction of identity.
Prof Fehlen from the University of Luxembourg already in 1997 bespoke the unique
status of the Luxemburgish job market which creates its wealth by utilizing
international niches, reflected in the banking sector. The industrialisation followed by
expanding the service sector led to a strong upward mobility, also promoted by the
high portion of foreigners, which could occupy lower level functions. In the last
decades this changed however, since the new immigrants from the border areas do
not begin in low level jobs, but enter the job market at the same level as inhabitants.
This new competition, as well as the phenomenon of unemployment so far nearly
unknown in Luxembourg, lead to an escape of Luxembourgers into the public and
semi public sector, where high entrance barriers for foreigners where created arguing
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with those people’s (at least) trilingualism. The old generations of immigrants, which
are less educated and trained than the cross border workers stand in a difficult
situation and cannot enter the safe environment of the public sector due to missing
language knowledge.
Already in 1997, Fehlen predicted the following: “In this sense each commuter in its
family, in its circle of acquaintances, in its residential surroundings is an advertising
medium for the Luxembourg job market and even more inhabitants of the areas close
to the border will consider working in Luxembourg as potential possibility." (in: Cahier
du Centre Universitaire, Série ISIS, no. 3, p. 43)
Eleven years later, the subsequent article by Wille reflected on the social aspects of
cross border workers in Luxembourg: "The atypical situation of both, growth in jobs
and unemployed persons, is to be attributed to the mismatch between required
qualifications and available Luxemburgish workforce, whereas Luxemburgish
unemployment numbers are less due to a cut-throat competition, than of structural
nature.” (in: Interculture Journal, Jahrgang 7, Ausgabe 6, p. 29)
The article deals with the creation of new, transnational areas in Luxembourg and its
effects on frontier workers. After a description of the Greater Region, the job market
and the characteristics of being a frontier worker, conflicts and different aspects are
lit up. Frontier workers deplore that they are unequally treated, particularly in view of
career perspectives. On the other side many think that cross-border workers take
away job opportunities from Luxembourgers as they accept lower pay, but who are
also better qualified and motivated. The public sector remains the only safe haven for
Luxembourgers due to the required multilingualism and personal contacts. The
investigation, however, shows that cross-border workers are not considered as
economic competition, as it is out of question that Luxembourg needs them to
generate and sustain economic growth. More problematic is the threat to the own
culture and language and the feeling becoming a stranger in the own country and not
being able to communicate in one´s native language. It is criticized that frontier
workers (esp. if they have family) are only coming to work in Luxembourg but spend
their private life in their home residence country. In addition, many envy the crossborders workers due to the perception of better earnings who themselves feel
stressed due to commuting. This evidences e.g. in more sick days. There are on an
average 4.7 nationalities cooperating in Luxembourg. As a result, factors such as
mentality differences, language knowledge and mutual prejudices are seen as largest
obstacles. Different approaches to work between French, Luxembourgers and
Germans often lead to misunderstandings.
The following citation from a Deloitte Senior Manager underlines the above findings:
“What our evidence shows is that cross-border workers do require special attention.
Luxembourg imports workforce from its neighbouring countries because it doesn’t
have enough skilled labour. The ability to face the talent challenge is linked to a
delicate mix of higher salaries, a good taxation system and good employment
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environment and opportunities. If any of these points cease to be a differentiator,
companies will start having issues in recruiting. And of course companies have
directly impact only on one of the three points: creating good job opportunities in a
positive environment. It is all a matter of pay off. As long a resident from Metz (just to
make an example) has an engaging job and can gain more money, he will stand the
commuting. I don’t really see a lot of intercultural issues in here, because the Greater
Region population is quite homogenous, and is used to contacts. Plus companies in
Luxembourg are used to be “international”. (Phone interview led on 14/2/2012)
This statement contradicts what Wille names intercultural issues as main reason for a
high level of stress.
To sum up, the literature on globalisation, Talent Management and in particular
frontier workers in Luxembourg has its limits as it is mainly based on data. So far, no
research has been done on the soft factors such as what are the main motivational
factors for those three nationalities for commuting to Luxembourg every day. I
attempt to close the identified gap by thoroughly analyzing interviews with cross
border workers from Germany, France and Belgium from middle and large sized
multi-nationals in Luxembourg.
6. Limitations of the research
The following limitations of the study must be acknowledged:
 Potential bias based on the researcher´s own perspective, assumptions and
interpretations which can be limited by a sound theoretical base as foundation
of the process.
 The outcome of the research which is highly dependent on the quality of
answers gathered in the interviews.
7. The next steps
Further literature search needs to be done so as to identify key authors who have
done research on frontier workers in other parts of the world. This could result in
interesting findings about differences or similarities. Furthermore, decision should be
taken whether it is recommendable to limit the research in the industry sector instead
of including finance and service employees. It might add value to draw a comparison
by also interviewing HR Directors in the respective company where the asked cross
border employees work for. Once this is clear, a questionnaire shall be drafted and a
pre-test be lead with 2 or 3 persons working in multi-nationals in Luxembourg,
employing the 3 nationalities under research.
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