David Brown thinks it's important to make his employees feel valued. So Brown, founder and president of Datotel, an IT services and data storage business in St. Louis with 38 employees, was dismayed when he realized his employee-of-the-month program wasn't helping morale. Recipients didn't seem enthusiastic about the award, which consisted of a $25 gift card, a perfunctory e-mail, and a mention on the company intranet.

It seems like a simple concept: Make employees feel appreciated, and they will work harder and be more loyal. But there is often a disconnect between the type of appreciation employees want and what their managers think they want, according to a recent study by the International Association of Administrative Professionals and OfficeTeam, a staffing company in Menlo Park, California. Managers responding to the survey ranked promotions and cash bonuses as the two most effective ways of recognizing employee accomplishments, but workers said they preferred an in-person thank-you or having a job well done reported to senior management. In other words, though a decent bonus will always be a highly coveted form of recognition, employers often underestimate the degree to which workers value kind words delivered face to face.

That may sound like good news for companies looking for inexpensive ways to show appreciation to employees. In many ways, though, it's easier to hand out a bonus than to create a culture in which saying thank you is a regular occurrence. "Especially during tough economic periods, it's important to give people face time and basic human appreciation on a regular basis," says Debra Condren, a business psychologist and founder of Manhattan Business Coaching in New York City. "A plaque may be nice for 15 minutes, but once it goes on the wall, people tend to forget about it."

Brown admits an employee-of-the-month program seemed like the least time-consuming way to make sure his staff continued to feel appreciated as Datotel grew. Based on information gleaned from employees during informal conversations, however, he realized a less rigid, more personal approach was in order. To encourage his eight-person management team to get in the habit of reporting employee accomplishments, he set aside part of his daily morning phone call with senior executives to discuss exemplary work, in addition to 15 minutes in the middle of each weekly management meeting. When an employee did something praiseworthy, Brown encouraged someone other than his or her direct manager to say thank you in person.

Brown also made a conscious effort to thank employees several times a week, often through handwritten notes mailed to their homes. "At a tech company, it's all too easy to just write e-mails," he says. "It takes time to sit down and write out a note, but it goes a long way."

Stephanie Lewis, an engineer who joined Datotel three years ago, was pleasantly surprised to find a note from Brown in her mailbox this past June. In the note, handwritten on Datotel stationery, Brown noted that Lewis had been praised during several recent management meetings for working closely with a customer and thanked her for her hard work. "It made me feel important to get something so personal and unique, especially since I'm sure David has several hundred other things swirling around in his head," Lewis says.

Thanking employees regularly may also help them accept criticism better, so long as the feedback is specific, says Rick Maurer, a consultant based in Arlington, Virginia, who specializes in guiding businesses through big changes. "If you make it clear that you are trying to make employees better at what they do, positive and negative feedback become a regular part of the conversation," he says. And it's important to discriminate. "If you say thank you all the time, even when people do mediocre work, you won't build an environment where people handle criticism better," says Maurer.

Persuading frontline managers to follow the boss's lead and adopt a culture of appreciation may prove daunting. Ken Wisnefski, founder of WebiMax, an online marketing company in Mount Laurel, New Jersey, had to have a difficult talk with a manager at his previous company, which he sold last year. Wisnefski says the manager had a habit of "throwing employees under the bus" during meetings and taking credit for their accomplishments. Angel Foglio, a former employee of the company who has since moved to WebiMax, recalls spending her days tiptoeing around the manager, trying to stay out of trouble. "She would recognize when people did something wrong, but not when they did something well," Foglio says.

Wisnefski finally called the manager into his office to explain the importance of recognizing people's accomplishments. "I told her if she tried to take credit for everything, she was going to have an unhappy staff, and that it was already starting," Wisnefski says. "I caught her off guard, and it was upsetting, but she was a lot more willing to give people credit after that."

Last May, when Wisnefski launched WebiMax, which owns several consumer websites, he recounted the cautionary tale during a meeting with his new management team. The story resonated with Danielle Hopely, vice president of the WebiMax website JustWeddings.com, who realized she had been an unappreciative manager at her previous job. Now, she makes an effort to walk around the office each day looking for opportunities to praise the members of her 20-person staff. "I do have to remind myself to do it, because I'm busy," Hopely says. "But I'm much happier as this kind of manager."

Foglio, who now works for Hopely, is much happier as well. "Danielle makes me feel like a valuable part of the company," Foglio says, citing a recent instance in which Hopely praised her for calming down a frantic bride. The best part, she adds, is that Hopely's appreciative attitude is beginning to rub off on her co-workers. "I hear the sales guys complimenting each other every day," Foglio says. "It's not just corporate showing appreciation. It's happening on a daily basis with the whole team."