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THE NEED FOR CAPACITY BUILDING IN HUMAN RESOURCE MANAGEMENT

RELATED ISSUES: A CASE STUDY FROM THE MIDDLE EAST (LEBANON)

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 European Scientific Journal June 2014 /SPECIAL/ edition vol.1 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431

THE NEED FOR CAPACITY BUILDING IN HUMAN

RESOURCE MANAGEMENT RELATED ISSUES: A CASE
STUDY FROM THE MIDDLE EAST (LEBANON)

Lara El Mouallem BE Eng., MSc

Farhad Analoui PhD
University of Bradford, Bradford, UK

Abstract
The remarkable evolution in the twentieth century has been a result of a new
perspective in understanding the importance of investing in individuals and organizational
human resources, and the implementation of capacity building strategies in various
organizations and in societies. This paper explores the case of ICO, an international
consultancy organization, based in the Middle East, specialized in architecture, engineering,
planning, environment and economics. This qualitative study, using thirteen selected semi-
structured interviews, observations, and secondary data, has been conducted in the Beirut
design office of the organization. The paper aims to examine major human resource related
capacity building themes in ICO which include employee involvement and motivation,
recruitment and selection, in addition to performance appraisal and reward management.
Keywords: Capacity building, performance appraisal, reward management, employee
involvement, motivation, human resource management

Introduction
Capacity can be defined as the ability of humans, institutions and societies to perform
successfully, to identify and reach their goals, and to change when necessary for
sustainability, development and advancement purposes (Ubels et al., 2010). Capacity
development is considered an endogenous dynamic process that relies on one’s motivation,
effort, and perseverance to learn and progress (Lopes and Theisohn, 2003) which enables
organizations to change, flourish and grow. Some of the major capacities that enhance growth
include leadership development and knowledge networking (Lopes and Theisohn, 2003).
The European Centre for Development Policy Management (ECDPM) explains its
perspective on capacity based on five core capabilities namely “capability to act and self-
organize, capability to generate development results, capability to relate, capability to adapt
and self-renew, and the capability to achieve coherence” (Fowler and Ubels, 2010, pp. 18-21).
Capacity development is very much related to the ways organizations operate (Fowler and
Ubels, 2010). Culture bears an understanding of the way an organization operates, its
procedures, beliefs and values; it is usually affected by the people employed in it, the past
incidents, present influences, and the type of work it undergoes (Handy, 1999). New skills,
competencies, and training are important features to be acquired in an organization for
capacity development; material resources such as equipment and capital assets are also
imperative for this purpose (Fowler and Ubels, 2010). Capacity development and its impacts
should be continuously assessed in an organization, so that existing gaps could be filled to
ensure constant progress. Disregarding capacity building programs would probably lead to
lack of growth and possible failure.
This paper is based on a detailed case study of an international consultancy
organization (ICO) located in Lebanon. The aim is to explore the extent to which capacity

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building processes have been used to enhance human resources aspects (functions) of the
organization and activities. To achieve this aim, first, the scope of the study and approaches to
capacity building, namely traditional and modern approaches, will be discussed. Then,
structure and culture of the ICO will be briefly presented. This will be followed by a more
detailed discussion of the main functions of HRM in ICO including performance appraisal,
employee involvement, recruitment, selection and retention. Finally, the main findings of the
study will be presented and the relevant conclusions will be researched.

Scope of the study

This study is primarily based on thirteen targeted semi-structured interviews; these
include eight employees and five line managers in the head office in Lebanon. Thus the study
employs the exploratory case study research design (Yin, 2003). The researchers conducted
one to one semi-structured interviews and made their discontinued observations over a period
of 12 months; hence they generated primary data and collected available secondary data
(information) to make sense of the activities and practices of the organization to prepare the
present study - a case study. Following collection of the data, the data generated using semi-
structured interviews were subjected to "thematic analysis". This resulted in identification of
three interrelated themes. These themes are discussed in some detail in the discussion part of
the paper.
Case studies are very often used in research concerning management and have become
very common in business topics (Gummesson, 2000; Yin, 2003). According to Gummesson
(1991, 2000), case study research can be implemented to reach either general conclusions
from a few cases, specific conclusions from a single case, or to produce a theory from various
cases and bring about some sort of change. In a case study research, data collection is usually
broad and is derived from various sources of information such as interviews, observations,
and documents or official publications (Yin, 1994). The exploratory method type applied in
this research, which is normally used in business studies, involves the use of an experimental
study in order to arrive at new hypotheses or more specific research questions (Gummesson,
2000).

Approaches to capacity building: an overview

Not surprisingly, the classical principles of management focus on principles for
enhancing productivity and increasing efficiency by designing a coherent organization
structure (Mullins and Christy, 2010). Emphasis is placed on the division of work, and
designation of responsibilities and duties for promoting the functional principle (Mullins and
Christy, 2010). Personnel management is one of the significant principles incorporated in
traditional organizations, whereby training and development programs, welfare programs,
salary incentive programs, and upgraded working conditions are implemented (Analoui, 1999;
Pindur et al., 1995). Higher work output and above average performance is measurable and
awarded with higher wage rates as a motivation incentive, since it is assumed that the
employee’s only purpose is to increase his/her income (Pindur et al., 1995; Kakabadse et al.,
1988). Coordination between management and staff is considered crucial for improving
productivity in terms of quality and quantity (Mullins and Christy, 2010). The role culture is a
dominant feature in classical organizations, whereby the emphasis is mainly concentrated on
the tasks allocated by senior management; the activities are well coordinated and planned
(Handy, 1999). From this perspective, the organizational structure is a formal hierarchy
characterized by an authoritarian leadership style where the primary focus is on the
organization and its needs; interaction is only vertical and knowledge exists at the top
management level (Pindur et al., 1995; Mullins and Christy, 2010). It’s obvious here that
organizational capacity development is supported through these classical management

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processes since they focus on improving organizational operations and promote division of
tasks. However, these processes do not advocate organizational learning, development of
employee skills, job satisfaction, social interactions and effective communication among all
hierarchy levels which are essential for human capacity building.
The management process in modern organizations characterized by their open systems
(Analoui, 1999, 2007), is considered a circular continuous cycle consisting of people working
in groups aiming to reach specific objectives and focusing on human relations/behaviours and
social needs (Pindur et al., 1995; Mullins and Christy, 2010). Employees perform better and
are more satisfied when they are treated by senior managers as people, and when their
innovative ideas are taken into account and encouraged by the senior managers (Kakabadse et
al., 1988). The open system is more prevalent (Analoui, 1999) in modern organizations; it
involves an informal structure where tasks are non-monotonous, knowledge exists at all levels
of the organization, and interaction among employees is vertical and horizontal (Pindur et al.,
1995). Communication can be both formal and informal; informal communication encourages
different departments and hierarchy levels to interact more easily and share knowledge, and it
is especially useful for team building (Analouei, 1999). Organizations can be informal and
flexible, thus characterized with more efficient communication and somewhat indeterminate
relationships (Mullins and Christy, 2010).
Human capacity building is mainly enhanced by encouraging the participation of
employees in decision making and by maintaining close relationships with the employees
(Pindur et al., 1995). Senior managers in modern organizations advocate human capacity
building through development of employees’ professional skills and promotion of teamwork
(Pindur et al., 1995). This is enhanced through the applied leadership style which is
considered democratic; hence the power is more widespread (Mullins and Christy, 2010). The
task culture is mostly incorporated in modern management organizations which sponsor
change and adaptation; it is characterized by being a team culture where an employee can
exercise more control over his/her work (Handy, 1999). Professionalism, respect and good
relationships thrive in this type of culture (Handy, 1999). Effective communication and
coaching from the senior managers to their subordinates can promote knowledge sharing,
organizational learning, and effective leadership capacity building (Roddy, 2004). Continuous
feedback and performance appraisal by senior managers are important for the employees’
performance enhancement and motivation (Keegan and Den Hartog, 2004).
Whilst the above characterizes the extreme position for the organizations and their
effort and contribution to capacity development, nevertheless, they can provide a dichotomy
for better understanding of the ICO position and philosophy to employee management and its
capacity building as a whole.

International consultancy organization: a case study

Description of ico organization
The company was founded in 1956, and is one of the world’s well known international
design consultancies in the world. It started its operations as a small engineering practice in
Beirut, and gradually gained recognition as a young and innovative company. Focusing
mainly on design of infrastructure, public facilities, housing and industrial plants, ICO
managed to obtain international reputation and widened its area of services. In a few decades,
ICO expanded into a full-service firm providing master planning, architecture, engineering
and economic services. The company has eleven technical departments which include
mechanical and industrial engineering, electrical engineering and telecommunications,
resources and environment, transportation, town planning and landscaping, architecture,
structural engineering, geotechnical and marine engineering, bridges, economics as well as
project management and contracts. Other departments consist of the human resources, quality

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management, and the information technology departments. Since the 1970s, the company
expanded geographically and now has headquarters in Asia, Europe, Middle East and Africa.
The firm also diversified geographically and acquired organizations in North America, Asia,
and Europe. Therefore, “the company is now considered to have multidisciplinary services in
a very wide geographic area” (ICO Employee Handbook, 2012).

Organization structure
ICO has over 6300 employees located in offices throughout the Middle East, Europe,
CIS and Asia. It has established the ICO Group, an international network of professional
service firms that includes 12,000 staff members, with clients in over 100 countries around the
world. ICO is characterized by having a hierarchical structure and a specific grading system
for its employees. Its grading structure ranges from grade P1 to grade P6; grade promotion
basically depends on the employee’s years of experience and the employee achievement and
development review (ICO Employee Handbook, 2012).

Organization Culture and Values

The dominant company culture can best be described as a combination of task and role
cultures (Handy, 1999) with emphasis on position rather than individual and the need for
commitment on the part of the employees to the work, people and global concerns; it strives to
build relationships between the company and its clients which are based on trust, honesty,
integrity and pride. The values on which ICO Group relies are centred on transparency, results
and high standards. These values include commitment to clients as well as commitment to
excellence and quality through the development and implementation of a Quality
Management System; in addition ICO as a Group recognises its obligations to social
responsibility through the relationships the organization builds with governments, citizens and
communities by equitable employment practices and community involvement (ICO Employee
Handbook, 2012). In the remaining part of the paper, three main human resources functions of
the company will be examined in more detail.

Performance appraisal at “ICO”

Achievement and Development Review (ADR)
Employee performance appraisal, mainly an evaluation process, is based on the
achievement and development review (ADR). The ADR consists of an assessment of an
employee’s technical and behavioural proficiencies, in addition to a development action plan
which the employee sees appropriate for him/her; technical skills demonstrate the technical
qualifications in the area of specialty (e.g. technical ability and continuous learning,
productivity and achievements, special technologies) while behavioural competencies relate to
the employee’s personal behavior towards the company and the work (e.g. communication
skills, teamwork, leading ability, dedication and commitment). The development action plan
is derived directly from the employee’s objectives (projects, tasks, etc.), technical skills and
behavioural competencies (See Table One).
The ADR goes through the following statuses:
Table 1: ADR Stages of employee performance evaluation
Initiated Evaluation has been initiated by HR dept.
Submitted to Employee submits the evaluation to his/her main evaluator.
evaluator
Returned to Evaluation returned by main evaluator for correction.
employee
Finalized Main Evaluator finishes the evaluation and submits it to employee for checking.
Submitted to Evaluation has been submitted to HR for revision.
HR
Source: ICO Employee Handbook, 2012

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The company uses the following “performance-rating guide” (See Table Two):

Table 2: Performance Rating Guide at ICO

Rating Sub-Rating Description
Objectives are fully achieved on a continuous basis
which significantly surpasses job duties and
Excellent
responsibilities. Employee is highly innovative, often
(4.5/5 and above)
initiates improvements, and basically functions
without guidance.
Objectives are achieved which often exceed job
High Proficiency duties and responsibilities. Employee is innovative,
(between 4/5 and 4.4/5) initiates improvements, and requires minimal
supervision.
Proficient
Objectives are achieved and may exceed job duties
Proficiency and responsibilities. Employee occasionally initiates
(between 3/5 and 3.9/5) improvements and requires a moderate amount of
supervision and follow-up.
Objectives are often not achieved. Employee does not
initiate improvements, requires considerable and
Unsatisfactory
frequent direction. Work consistently performed
(2.9/5 and below)
without improvement will result in performance
improvement plan, reassignment, or outplacement.
Source: ICO Employee Handbook, 2012

Performance Appraisal and Reward Management

The ADR is required to be completed by the employee, and is based on the
employee’s perception of his/her development and progress. The ADR comments prepared by
the employee for each category are assessed and reviewed separately by the project
manager/head of design unit (Line Managers) and soon after that the department director.
Alarmingly, no constructive or professional dialogue/feedback is conducted between the
project manager/head of design unit or director and the subordinate employee. It is reported
by employees that,
“…the ADR is not taken seriously as a means of performance evaluation.” (Interview
No. 12)
An employee commented,
“Performance rating and evaluation is not very clear regarding its relation with the
promotion scheme, whereby an employee might get promoted for vague reasons that is often
unfair to other employees.” (Interview No. 7)
The researcher also observed that the department director who distributes bonuses and
salary increases to the employees is not much aware of the employees’ work performances.
Another experienced employee stated,
“In one of the reward distribution occasions at ICO, a department director praised an
employee for his remarkable performance due to the substantial bonus the employee received;
two weeks later while allocating the salary increase notifications, the director criticized the
same employee he acclaimed two weeks earlier for ineffective performance.” (Interview No.
4)
In modern organizations, goals related to the organization’s objectives and projects’
aims should be clearly set for employees in order to be effectively appraised according to
these goals and criteria, and then given the feedback and comments for improving their
performance (Lewis, 2006; Redman, 2006). Performance management systems are usually
comprised of a systematic review procedure which detects the progress attained and
consequently specifies the training and developmental needs of the employee being appraised

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as well as the rewards to be gained (Redman, 2006). It is therefore imperative to note that
effective job performance is based on both motivation and skill; skill can be enhanced further
through the provision of appropriate training and development (Newell, 2006; Analoui, 2007).
Motivation on the other hand depends greatly on the person’s attitude and principles, as well
as the behaviour and beliefs of the people who are interacting with him/her (Analoui, 1997;
Newell, 2006).
Reward strategies play a major role in maintaining a ‘sustained competitive advantage’
(Kessler, 2001; Analoui, 2007). Reward systems ensure the accomplishment of fundamental
Human Resource Management (HRM) goals such as commitment and quality, and aim at
creating high performance organizational cultures (Armstrong, 2010; Bratton and Gold,
1999). Appealing reward systems are known to draw the attention of highly experienced
people, and can also decrease turnover rates in an organization (Bratton and Gold, 1999). Both
financial and non-financial rewards are required in an organization’s reward system (Lewis,
2006). Non-financial rewards such as recognition, appreciation, accountability, and personal
development are considered significant motivational factors for employees; these targets can
be achieved through more challenging work, job enrichment, more employee involvement,
greater autonomy for employees to select their own approach to complete their work and to
set their developmental goals and requirements, as well as defining their performance
standards (Lewis, 2006).
At ICO, it is observed that higher bonuses are granted to people who “do more
overtime hours”, without considering the employee’s effectiveness and efficiency. In one
case, it was reported that an engineer with P3 grade, was given only 1 month salary as bonus
(employees in this grade usually receive 3 to 4 month salaries as bonuses). The discontented
female employee commented,
“I completed my tasks within the working hours, so as to save some time for my
personal life and family. When I approached the department director and asked why I received
a relatively low bonus, he replied, ‘the main reasons are that I don’t know how effective you
are or the type of work you do, in addition to the fact that you don’t put overtime hours.’ ”
(Interview No. 5)
Another employee said,
“It is obvious that the department directors do not do their jobs properly…they do not
evaluate their staff’s achievements appropriately.” (Interview No. 3)
Interestingly, it was observed that employees have learnt to demonstrate their
effectiveness and efficiency by staying overtime; a line manager suggested,
“Unfortunately, the majority of staff at ICO waste a big fraction of their working hours
by not being productive, in order to work during their overtime hours and consequently get
higher bonuses. In a way, the company’s reward management system is promoting
inefficiency, incompetence and lack of productivity.” (Interview No. 11)

Employee involvement and motivation

The lack of employee motivation at ICO is partly due to the fact that project engineers,
mainly classified as P1 and P2 grades, are not involved early enough in the projects,
especially at the planning and data collection stages. Also, they are very often not invited to
attend meetings.
As one engineer commented, “Only project managers and team leaders attend these
meetings.” (Interview No. 2)
Consequently, there is high turnover rate for junior engineers at ICO. As a line
manager explained,
“Managers often cite imminent project deadlines and lack of time as the reasons for
not being able to coach and involve their subordinates. The involvement of project engineers

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is a crucial aspect for employee commitment and motivation, and leads to better results and
improved work quality.” (Interview No. 6)
Employee involvement (EI) is considered an essential HRM practice since it can lead
to a high degree of employee commitment through involving and empowering employees
(Marchington, 2001; Dundon and Wilkinson, 2006). EI can be implemented through effective
communication between the managers and their subordinates, as well as by encouraging
employees to be creative and share their ideas with their managers for problem solving
(Marchington, 2001; Dundon and Wilkinson, 2006). Therefore, project engineers feel that
they ought to attend the meetings and receive the adequate coaching from their line
managers/project managers; this is very effective in promoting knowledge transfer (Roddy,
2004).
EI can also be further enhanced through employee participation in a bigger variety of
tasks, team working, and financial involvement through the formation of an association
between the employee’s rewards and his/her department’s performance (Marchington, 2001;
Dundon and Wilkinson, 2006). Employee participation or involvement is also based on the
extent of influence employees have on decision-making in an organization, and it can range
from just being informed of the decisions made to having an impact or control over these
decisions (Dundon and Wilkinson, 2006). For EI to be successful, managers are required to be
fully committed to it (Marchington, 2001). As an engineer remarked,
“There is little chance of involvement for the most of us. Often decisions are made and
presented to us… we are just implementers.” (Interview No. 1)
High turnover rates suggest that employees are not satisfied with their jobs; this can
negatively influence the organization’s image in the market, with respect to the clients and
future candidates applying for jobs at the organization, and can imply that the organization’s
management is weak (Torrington et al., 2005).
Due to high turnover rates at ICO, employee retention is deemed essential; this is
basically achieved through six major avenues which are “pay, managing expectations,
induction, family-friendly HR practices, training and development, and improving the quality
of line management” (Torrington et al., 2005, p. 171). Knowledge networking can be
promoted through effective communication and mentoring from the line managers/project
managers to their subordinates (Roddy, 2004). An experienced line manager commented,
“Meetings of the work teams should be held regularly and frequently to review
progress, and generate ideas, and suggestions. It is essential to provide the team members with
a chance to play a role in the decision making … this would help motivating and encouraging
open communication and collaboration among the staff … this is not rocket science.”
(Interview No. 9)
This also makes the organization more organic (Gardiner, 2005). It is evident that ICO
management needs to realize that the engineer’s needs for involvement and professional
development can contribute effectively to the organization’s strategic objectives (Keegan and
Den Hartog, 2004). It is reported that organizations which lack competencies and skills among
its employees are less likely to introduce innovation and creativity in the workplace (Grugulis,
2006).

Human resource management recruitment, selection and retention

The recruitment and selection procedure in an organization usually shows the strategy
an organization follows for managing people (Bratton and Gold, 2007). It is reported that ICO
is not aware of the costs incurred if candidates are not selected properly; these include the
costs of training new employees and the cost of employee turnover. An experienced manager
commented,

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“.. they [the senior managers] are not aware of the cost of losing trained and
experienced employees… every time someone leaves not only some resources are wasted but
also more resources are needed to recruit and train the newcomers…if only they were aware
of this.” (Interview No. 10)
It was also reported that at ICO the employees with bad experience in the organization
tend to discourage potential applicants from applying for vacant posts; as an employee
observed, “the management should realize that this whole process could adversely affect the
ICO image in the market.” (Interview No. 8)
A line manager revealed that in one incident at ICO, the Human Resources (HR)
Department Manager openly said, “Every employee at ICO is dispensable; no one is that
exceptional.” (Interview No. 13)
It is evident that the HR department’s responsibility to recognize the potential of
current employees and to arrange for the most deserving employees to progress and take on
more senior roles for employee retention (Newell, 2006) is not acknowledged.

Conclusion and recommendations

It can be deduced that classical management theories advocate organizational capacity
development with the focus being on the organization’s needs and objectives. On the other
hand, modern management theories tend to pay attention to the importance of human relations
and their psychological social needs. ICO is recognized to be mostly dominated by classical
bureaucratic management principles and practices. The major restrictions which are impeding
ICO’s organizational and human capacity building processes involve performance appraisal
and reward management systems, employee involvement and motivation, as well as human
resource management recruitment, selection and retention. Recommendations for addressing
these constraints will surely have implications for other similar organizations. These include:
The senior managers require development and training in order to gain more insight
and awareness of their managerial effectiveness for enhanced capacity building purposes.
Therefore, management development of the senior managers should be planned strategically,
in order to enhance their own self-development and self-management.
Transformational leadership should be advocated in the organization, since it can bring
about new changes and strategies, and can consequently lead to corporate sustainability and
further success. Senior managers need to act more as transformational leaders by motivating
and leading their employees to perform better and be creative.
The achievement and development review (ADR), which should be the cornerstone for
promoting engineers from one grade to the other and for compensating/rewarding them, has
proven to be inefficient in measuring employee performance. It is imperative that employee
performance and accomplishments be assessed against set objectives that are predefined for
each employee grade or phase in his/her career. The employee at ICO would be better
evaluated using a 360 degree appraisal approach, whereby the evaluation committee would be
informed by important stakeholders such as the project managers, area managers or
coordinators of the various departments, and the clients.
At ICO, rewards should be based on more specific and targeted employee criteria
rather than a more holistic approach. This implies that rather than assigning bonuses
according to the years of experience, years spent in the company (mistakenly referred to as
employee commitment) and overtime hours, other factors should be taken into account such
as skills, progress and development, achievements and feedback obtained from all of the
involved parties which include the group leaders and the project managers (360 degree
appraisal approach). The appraiser ought to be aware of all of these factors in order to be able
to reward the employee fairly, and to offer incentive based compensations for more

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deserving/outstanding employees. Promotions that require higher work load should be

accompanied by the appropriate rewarding policies.
Human resources procedures and systems need to be updated for more effective
employee recruitment, selection, and retention, and should include clearer non-biased
performance appraisal plans and reward systems. The HR department is required to play a
substantial role in achieving the organization’s strategic plans and objectives. Therefore, the
HR department should expand to handle additional tasks involving effective recruitment and
selection, training and development, as well as being able to provide an adequate support
system for employees to address their needs, concerns, and problems/difficulties. It is
recommended that a human resources representative be present and actively participate in the
board of directors’ monthly meetings.

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