Someone in charge who’s equipped effectively / personally / spontaneously / informally to deliver praise when praise is due can work pretty well.

We set up a formal recognition scheme in my last organisation, where each year the staff and students (it was higher ed) could nominate people against six different categories, for times when they'd gone above and beyond. The six categories related to our organisational values.

The nominations and the winners were all acknowledged during our staff conference, and the award started as a box of chocolates, and then (sadly) after the death of a colleague we named the award scheme after her and the winners got a paperweight engraved with the details. It cost a few hundred pounds to get the paperweights, so it wasn't expensive at all.

What I'd say the best outcome was that each nominee got all the things that people had said about them, thanking them for when they'd gone above and beyond and saying what it meant to them. It also focused people's minds on ways that we all add value, and make a difference to others. It was also VERY popular - a really good thing to receive for individuals/teams, but also made everyone feel very positive about the organisation and the personal stories that went into making it a success.

In reply to Nina Waters:

That's a great story.

There is something inherently cheesy about most employee of the month schemes. I would think the staff had a feeling of ownership of your. Also, chocolate is a much better idea than a cup or a shield.