Employees want to know you care. Build a culture of thanks and your people will return the favor many times over.

Praise Publicly

Most people prefer to receive praise publicly, in full view of their peers and co-workers. It makes them proud when their work colleagues know that they're being singled out for recognition when they performed well.

Speak From Your Heart

Only reward your employees when you sincerely believe they deserve recognition and it comes from your heart. Especially avoid the temptation to combine your praise with feedback about what needs to be improved moving forward. That would wipe out any good feelings you've created with the reward.

Be Specific

Employees want to know what they're doing right, so when you praise them cite their specific accomplishments rather than a vague acknowledgement of a job generally well done. Instead of, "Thanks for the fabulous job you're doing!" go with, "I see that you exceeded your sales goal by 40 percent today and you're now on track to have your best month ever. Congratulations!" Remember: The behavior you reward is the behavior you'll get more of.

Tailor the Reward

People are motivated by different things: money, time off, promotion. To reward effort you believe has surpassed expectations, consider compensation that is both meaningful and beneficial to that particular employee. Avoid projecting what you think is relevant; instead, do your best to find out what really drives your employees. — Source: Inc.com