To begin with, the praise offered must be sincere. You can avoid appearing phony by using it only when it is deserved—when the employee is doing excellent work. Praise also works best when it is very specific and immediately follows the event. Exceptional performance should be followed up with not only praise, but rewards as well.
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"Hal, you’re doing a great job; keep up the good work" is not an example of good praise. For all you know, Hal spent that morning making personal calls and goofing off. Your remark will make you appear like a pushover, someone easy to fool.
On the other hand, if Hal recently completed a marketing report ahead of schedule that included several important findings, then you might say, "Hal, you did a great job on that video sales report. Keep up the good work."
You can also go into more detail with Hal to let him know how much it means to you and the company. You might even suggest he join you for lunch as a way to reward him for the impact that his findings will have on future sales efforts.
Not only should praise be specific, it should immediately follow the employee’s effort or achievement. This will give it the greatest impact. It also tells your people you know immediately when they are on the right track. Just as it is important that you promptly tell an employee when an improvement in performance is in order, you should take the time to give earned praise on the spot. No matter how busy, the brief time spent in thanking an employee is time well spent. Giving praise has strong, positive effects not only on the recipient but on his or her coworkers, who see that you care not only about what they do wrong but what they do right.
Let’s assume that Hal has been a mediocre employee until this occasion. You might want to sit down with him and specify what he did right this time compared to past performance. You might conclude your meeting by giving him another assignment: "Hal, I want you to take the same approach on this study as you did on the video sales analysis."
One caveat about the use of praise: Recognize that praise rings hollow if that’s all hardworking employees get. Bonuses, interesting job assignments, and other forms of appreciation are absolutely essential at some point to sustain motivation.