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Xcel Pays For Employees Who Excel
Human Resource

Xcel Energy in Minneapolis is an electricity and natural gas utilities that is trying to link rewards to performances in their company. This company has set up new incentive programs to get employees suggestions. With the new merit-pay programs, it motivates employees to perform higher to receive the incentives.

Xcel is trying to have a fair incentive plan for all employees to feel appreciated and perform to their best. By creating the Xpress Ideas, Xcel provided a reward opportunity for employees to submit beneficial suggestions for the company. Xcel was paying the same price for all suggestions though they were not tested to be successful. After this program was started they developed the Merit-pay program to keep improving operations and be far ahead of the average company. “Continuously improving our operations to be the lowest cost, most reliable and most environmentally sound energy provider” (Noe, Hollenbeck, Gerhart, & Wright, 2009). With the Merit-pay budget it allows top performers to get more of an incentive but still gives the average workers an incentive they are pleased with. With the merit-pay budget it is important to channel more to non-management employees. The merit-pay also limits managers to 2% which frees more money for other employees. The merit-pay budget urges managers to give bigger raises and bonuses to the best employees for being a performer. With the Merit-pay budget, Xcel will more likely see that the performance levels of many individuals is higher because they are motivated to get a reward. I think the suggestion reward program is ok for a short term incentive program but isn’t really proper for increasing operation.

To encourage suggestions but work with the merit-pay program, Xcel needs to first channel more to non-management employees. By having the 2%limit on

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