In the music industry, there are plenty of prima donnas, big egos and star-studded attitudes, but you won’t hear Handleman Co. plugging itself or negotiating for face-time.
It doesn’t need to employees at the Troy-based distributor of prerecorded music are more than happy to brag that Handleman is a pretty cool place to work.
“You can say you’re a value-driven company and an employer of choice, but when your own employees go to a third party and say, ‘This is a cool place, you have to take a look at us,’ that resonates,” says Stephen Strome, chairman and CEO of Handleman Co., which stocks more than 50,000 music titles each year for major retailers including Wal-Mart, Best Buy and Kmart in the United States, Canada and United Kingdom.
The company was one of 60 companies deemed a “Cool Place to Work” in Michigan by a local publication and has a four-year run as one of Metropolitan Detroit’s 101 Best and Brightest Companies to Work For by the Michigan Business & Professional Association.
Handleman rolls out the red carpet for its employees: Accessible management and an open-door policy foster a culture in which each person is instrumental to success. The company recruits and trains staff in the science of music distribution so Handleman can maintain its top-billing position in the industry with more than $1.3 billion in sales.
Without employees working together, success would be impossible to maintain, Strome says, and he works hard to make sure he’s getting the most out of every person
“You can have the brightest, smartest, most intelligent CEO in the world, but without the people who are out there servicing the stores every single day, checking inventory, putting out product and shipping product to vendors, you don’t have a company that works,” Strome says.
The guiding culture
With its latest acquisition Crave Entertainment Group, a distributor of video hardware, software and accessories Handleman now employs more than 2,400 people. But despite its size, the tight culture doesn’t allow any member to drift.
There’s a family feel to the work environment. Posters decorate hallways, and music plays from employees’ computers. Strome himself might pop into a worker’s cubicle to get feedback on which markets are selling more of Jessica Simpson’s new CD.
Strome describes his management style as skimming and diving. He says successful CEOs manage with an aerial view but hone in on problems that appear on the radar.
“You look at your organization from a 30,000-foot level, but when you see a problem, you must be able to dive in and get it fixed,” Strome says.
Take Handleman’s 2004 technology conversion from a legacy computer program to an enterprise resource planning platform. While the process was planned with milestones to measure success, Strome worried about the effect conversion challenges might have on the business. So he called daily meetings to discuss and chart the conversion progress and hash out concerns and roadblocks as the company made the major switch.
Strome keeps his management style loose, not limiting people to their job descriptions, and always asks for feedback. And this culture starts at the top.
“He sets the tone for the whole building,” says Mark Albrecht, senior vice president of human resources and organizational development. “Our sales were $1.3 billion, but if you walked through the building, people say, ‘Hi, Steve,’ and Steve knows their names. They look to him and feel comfortable.”
Strome attributes the comfortable culture to core values of honesty and integrity, accountability, continuous learning, and a focus on stakeholders, which includes customers, employees, vendors and shareholders.
Handleman Co. is upfront about these core values when it recruits and is diligent about reminding employees of them as they build their careers. Ensuring that field sales personnel feel just as connected to the company as employees with offices down the hall from corporate executives is a challenge, Strome says.
“One of the toughest things is to maintain (our culture) in the field,” he says. “We have, right now, more than 1,000 people out in the field in the U.S., Canada and U.K. Some of them work out of their cars. What is Handleman to these folks?”
What is Handleman besides a laptop, a distribution map and mileage? People. District managers oversee field sales representatives, and weekly conference calls help them keep tabs on their employees. So does the quarterly publication Handleman Today. When field sales representatives are hired, they attend training sessions at Handleman’s corporate facility to gain a full understanding of the company’s roots. And Strome makes a habit of sending e-mails and letters to each employee at least five times a year.
Full-time employees attend annual meetings, where senior officers listen and mingle.
“We try to get a good representation of people at these meetings, and (executives) don’t just stand up, say hello and talk,” says Strome. “We stay for the meeting, we go to dinner with employees, I make a point of sitting down at different tables and talking to different people so they know who I am. And we communicate.”
Handleman’s first tracks weren’t in the music business at all. Before 1953, it called on drug and grocery stores rather than mass merchants, and it sold pharmaceuticals and beauty aids rather than music.
The music business was miniscule for Handleman in 1953, but by 1980, sales had escalated to about $200 million, climbing steadily to today’s $1.3 billion. And it uses sophisticated systems to plot strategy.
“The business is more of a science than an art,” Strome says.
Handleman analyzes demographics, predicts which albums will sell and which will flop and measures sales in every market to determine who needs what. Should Wal-Mart in Detroit get more Britney Spears albums and fewer Garth Brooks cuts? How will Latin dance music do in this store instead?
Handleman Co. tailors the inventory of more than 3,500 stores in the United States and Canada, and just as many in the United Kingdom, to appeal to each market’s tastes.
You can’t graduate with a major in this business, so training has been invaluable to Handleman’s ability to succeed as a top category manager with a cool reputation. This is especially important because it recruits two-thirds of its new hires from college campuses and industries outside of music.
“We hire people from the consumer products industry who understand category management,” Strome says. “We hire people with IT backgrounds. We hire people with marketing backgrounds and we hire people with strong logistics backgrounds. Those are the areas that are core to managing our business.”
Additionally, Handleman scouts annually for fresh talent at college campuses. Because of the nature of the business, recent college grads tend to seek out Handleman, and the company reviews 150 applications for every college recruit it hires.
Ten- to 12-week training programs focus on management associate, operations management and field sales management. The point is to help establish career paths for college graduates, and these types of programs illustrate a diversity of tracks each employee can follow.
Strome launched the programs in 1994, realizing that such a specialized industry requires formal training. He also recognized the importance of feeding the company with a constant stream of talent and new ideas.
“We bring in people from the outside to get new ideas, new thoughts a different perspective on the way we run our business,” Strome says. “We don’t have all the answers, and it’s important to inject new thinking, new ideas.”
Remix and reinvent
Perhaps another factor that plays into Handleman Co.’s we-are-family management style is the way Strome extracts new ideas and different ways of thinking from employees. Rather than asking an IT person how to ramp up technology and a marketing associate how to promote an album, he’ll flip-flip their roles.
Employees don’t always think this is good.
“Forcing people into other areas from their core competencies and strengths is always a difficult process,” Strome says.
But this doesn’t keep him from mixing up employees’ to-do lists and switching their job descriptions.
“We’ll take a marketing person and put them in IT, take an IT person and put them in finance,” Strome says. “We take people out of their comfort zones and expose them to different areas. You get a convergence of ideas from different viewpoints, and we mix them up a bit. And that has been a formula for success here.”
He calls it cross-functional development.
“It adds to that family feeling,” he says. “You’ve worked in IT, finance, customer service you know how other areas operate, and it builds a better, more collaborative team.”
Handleman produces a number of success stories from this mix-and-match tactic. The account manager for its Wal-Mart team joined the company 10 years ago and has worked in most departments. The CFO began his career at Handleman nearly 20 years ago as head of its internal audit department. He joined after leaving a middle-management position in another industry.
The senior vice president joined the company 10 years ago in the IT department. The head of the internal audit department is now running a customer team.
“Some people don’t want to do it, but others accept the challenge,” Strome says.
These types of moves allow Handleman to continue promoting employees from within. When Strome “forces” a switch, employees continue to learn and grow. And this, to him, makes Handleman a pretty good place to work.
“Every single job and person is critical to making us function well,” he says. “The people in the organization make it happen you can never forget that. You can’t do this job by yourself.”
How to reach: Handleman Co., www.handleman.com