Research
Powering Recognition at Xcel Energy
How one company's strategic recognition lead to $17 million in bottom-line savings.
Xcel Energy has enlisted the help of all of its 10,000 employees in improving—everything, every day. The result? Thousands of improvements to systems, processes and working conditions that equaled more than $17 million in savings opportunities. And, says the program’s sponsor, “That means our investment in recognition is earning our company at least a 20-times return.”
The quest of Xcel Energy employees to turn problems into improvements is spurred by the company’s Xpress Ideas suggestion recognition program. A leading energy provider, Xcel Energy has never underestimated the power of targeted, strategic recognition. The company uses several different types of recognition programs to encourage employee engagement, involvement and ownership in the company.
USING RECOGNITION TO ELEVATE MANAGERS
As Xcel Energy leaders evaluated areas were they could improve employee performance and bottom-line results, they recognized that an important gap existed when people were promoted to managerial positions.
“People get promoted because of what they do, not necessarily because they are good managers,” says Bill Newby, Xcel Energy’s managing director of enterprise process management. “That means we need to give them the tools, training and encouragement they need to become effective managers, and our recognition programs are an essential part of the tool kit.”
In an effort to elevate the caliber of managers and, consequently, the performance of all employees, Xcel Energy invested in making its employee suggestion recognition program more strategic. The program was designed to be more than just a way of rewarding effort; instead Xcel Energy created recognition systems that become a way for managers to begin conversations about improvement with employees—tools that inspire thought, action and results.
Like many other companies, Xcel Energy had a hunch its employees had great ideas for making improvements―they just needed to be encouraged to share them in a forum where they knew they would be heard and their ideas acted upon.
“We’re amazed at the great ideas that are out there,” says John Torres, manager of corporate rewards and recognition at Xcel Energy. “With more than 10,000 employees working in 10 states, we needed a vehicle to gather the ideas and recognize them. Xpress Ideas has proven to be an effective way to generate ideas and recognize them appropriately.”
But gathering those ideas wasn’t a simple matter. Xcel Energy began with a manual program that required managers to collect, evaluate and award various levels of recognition appropriate to the idea.
“Managers actually had to write out a paper certificate to employees, and then write out one for each suggestion program investigator and keep a paper record for themselves,” says Torres. “That ended up being a paperwork nightmare for managers.”
“All the research indicates that the recognition needs to be as immediate as possible,” says Torres. “We had people who deserved recognition for ideas that sometimes had the potential to generate thousands, even hundreds of thousands of dollars to the company, but the recognition would have to wait until a manager had time to fill out a certificate and, in some cases, mail that certificate to the employee. It just wasn’t timely.”
Of even greater concern to management was the need to ensure that the program provided a mechanism for linking recognition to Xcel Energy’s corporate values and mission statement.
“We are far past the time when recognition and rewards were merely corporate niceties,” says Chester Elton, author of A Carrot a Day, a best-selling business book. “Recognition has to be strategic. It has to deliver bottom-line results. Today, recognition must be consistent, meaningful and focused to be effective.”
FOSTERING BUY-IN
The first step to improving the effectiveness of recognition at Xcel Energy was to get managers behind the program, and that meant streamlining processes.
“We knew we needed to simplify things and make it easier for managers to participate,” says Torres. “Now we have an online application that allows managers to put all the information into a report that we capture electronically. This makes the recognition immediately visible to us, and immediate notification goes out to recipients. I can’t tell you how many compliments we’ve received—our managers love it now.”
In addition to providing the systems, technology and processes to make recognition simple and more easily measured, Xcel Energy offers managers recognition consulting services through its Corporate Rewards and Recognition team.
“Keeping recognition targeted and participation high is hard work,” says Newby. “By consulting with the business units we can discover what specific problems they hope to solve and target the recognition promotions to meet those goals. For example, if it’s a cash crunch, they want to recognize those who find ways to save money. If they are having safety issues, they want to promote recognition for those who improve safety conditions. The managers welcome our help because they see results.”
“It’s no wonder managers get on board,” adds Torres. “They’re not just looking at the program as, ‘I have to write another thank-you note.’ They’re looking at it as, ‘This helps me encourage employees to improve business results, and that’s something I get to report to my boss.’ It motivates everyone in the process.”
Newby and his team also improved the company’s recognition by implementing an On-the-Spot program, revamping their service award program to a strategic “Years of Contribution” program and introduced a new Above & Beyond program designed around the company’s core values.
“The Web tool we’ve designed for the Above & Beyond recognition program ensures that people must recognize the behavior for what it is,” says Bill Newby. “It won’t let you just say, ‘Thank you for doing a great job.’ The nomination for the behavior has to be related to a corporate value.
“That stops people in their tracks. They’re forced to ask themselves, ‘What is it – is it innovation? Is it credibility? Is it developing new ways to do business?’ As a result, the nomination itself becomes another way for us to communicate and promote corporate values,” says Newby.
Xcel Energy employee and recognition recipient Harryette Johnson agrees that targeted, strategic recognition makes a powerful tool.
“Recognition is important at Xcel Energy, and that makes a big difference. Once you realize that your contribution is being noticed and someone is going to recognize you for it, you can move the earth for the company,” says Johnson. “It energizes you to do more; it raises the bar, and you want to go higher next time.”
CHANGING A CULTURE
Recognition at Xcel Energy has as much to do with creating a culture as it does with making sure employees feel recognized.
Says Torres, “I have managers who tell me their employees used to come to work asking, ‘How do I do a good job today?’ Now they ask, ‘How do I do it better?’”
“I see my people take away a sense of ownership in the company,” says Ruben Roman, a supervisor at Xcel Energy’s Comanche Generating Station in Pueblo, Colo. “And when you own something you take care of it differently; you treat it differently because you take pride in it. The attitude becomes, ‘This company is part mine, and I want to make sure it runs the best or the safest it can.’ Bottom line? When the rubber meets the road, recognition programs can do wonderful things.”
Indeed, across Xcel Energy, managers are turning every opportunity for recognition into a reflection on the employees’ contributions.
“Recognition is not typically an expected or standard part of the employee life cycle,” says Newby, “but we’re trying to change that at Xcel Energy. We’re even changing expectations in our service recognition program. We no longer call it ‘Years of Service,’ but ‘Years of Contribution.’ By integrating recognition with culture and by demonstrating the effect recognition can have on business results, we’re building a new recognition mentality among Xcel Energy managers and employees.”
SUMMARY:
RECOGNITION GENERATES RESULTS AT XCEL ENERGY
The success of Xcel Energy’s Xpress Ideas program continues to grow. The company received 7,662 suggestions last year and implemented about two thirds of them. The program has identified savings opportunities in the tens of millions of dollars over the last five years.
The Ragan Report, a weekly newsletter for communication professionals, recently published an article about Xpress Ideas titled, “An employee suggestion system that actually works.” Key reasons cited include:
• Small, meaningful rewards that can add up keep employees focused on identifying real solutions to real problems.
• Xpress Ideas is deeply integrated into the organization, with promotions at the business unit level.
• Xpress Ideas is “elegant and simple”; it doesn’t make work for employees or managers.
• The program enjoys the support of top management.
“The payout of Xpress Ideas is a small percentage of what the company gets in return as far as employees being involved, engaged in their jobs, improving safety, processes, whatever it may be,” says Roman. “Suddenly, things people have been tolerating for years because that’s the way it’s always been are now being taken care of and made better.
“We’ve seen a correlation in the reduction of safety incidents. For years I’ve been saying, ‘Look at our safety record and our number of reportable accidents: they are consistently down, especially in the operations department, where our people use the Xpress Ideas program most.’ As our participation goes up our safety incidents go down. The correlation is there.”
Roman’s experience agrees with the findings of a recent study by The Public Agenda Forum, a non-profit public policy research organization. It reports that fewer than one in four American workers is working at full potential; half of all workers do no more than directly asked; and 75% of employees say they could be more effective in their jobs.
“Recognition is a part of everything we do at Xcel Energy,” says Newby. “It’s a way to reinforce our corporate values, our business priorities and the behaviors that benefit the company.”
“Xcel Energy has proved recognition done right is much more than an employee benefit; it drives business results,” says Adrian Gostick, author of the Carrot series of management books. “Strategic programs consider both the manager’s and employee’s needs, encourage loyalty, engagement, voluntary effort and enthusiasm. Before you know it, recognition has changed employee culture and business results.”
Bill Newby, Managing Director - Enterprise Process Management
Xcel Energy
550 15th Street, Suite 1000
Denver, CO 80202
Phone: 303-571-6567
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