Most people come to work to do a great job. Their biggest problem is usually that they're not quite sure what that is. And they can't know unless you give them feedback about what works and what doesn't.
What You Want to Do
1. Give feedback as quickly as possible. Someone does something great; say so at once. Don't save it for an appraisal or report. Do it today.
2. Go public with positive feedback where appropriate. Praise in public is worth more than praise in private.
3. Be specific. "Good job!" tells your best manager nothing. "I really liked the accuracy of your report," tells her what she should keep paying attention to. Praising someone for punctuality is the best way to keep them on time.
4. Ask your report questions about what made a meeting, survey, interview or sales call so effective. Asking questions is a terrific way to pay a compliment: it shows you know you can learn from someone else, and value that person's perspective. It will also give you the detail you need to be specific.
5. Inquire about other peoples' contributions. Who else worked on the project? This gives the obvious author a chance to share credit, and identifies other high achievers you want to notice. No good work is done entirely alone and overlooking one contributor can cause as much harm as praising another.
6. Monitor improvement, and progress. If a group or team is getting a lot better at something, say so. Everyone likes to feel that they are making headway so ask yourself: what are these people doing better now than three months ago?
What You Don't Want to Do
7. Overdo your praise. Make it meaningful, not routine.
8. Embarrass. Keep negative feedback private. And use it sparingly, when it really counts.
9. Fudge.Be very detailed, and suggest remedies so that you don't inspire hopelessness.
10. Get stuck in the past. Focus on the future. Suggestions for doing better next time are more motivating than rehashing past events that can't be changed.
11. Above all: remember what it was like when you weren't the boss. What made you want to strive for improvement? Whether it was a good experience or a bad one, use it--only to do it better for others.