Signed in the summer from Bayer Leverkusen, Xhaka was immediately named captain by manager Regis Le Bris.
Sunderland sit eighth on the Premier League table - just two points off the top four.
"He's an amazing guy," Ballard told BBC Sport about Xhaka.
"I was a bit surprised when we signed him. I wasn't sure what it'd be like. I didn't think one person could affect the team the way he's done.
"From minute one, I think the standards really rose because he does everything to 100%.
"It's kind of like, well if he's got that amazing career and he's still doing everything perfectly, why wouldn't we? And I think it just sort of lifted the standards."
Ballard also revealed: "I mean literally everything, from the work in the gym to the standards, he puts out on the training pitch.
"You know we've just been outside, it can be cold and wet and but he's 100% focused and giving everything in training.
"So when some of us boys may be not putting that work in and you see him doing it, it's unacceptable for us.
"If he's doing it, he's won titles and played hundreds of games in the Premier League. Then why shouldn't we? It's lifted everyone."