Appreciation matters. In a workplace, appreciation stimulates productivity because when an employee feels that he is appreciated for the work he is doing, this then translates to gratitude and in turn an employee would be motivated to earn an even higher degree of respect for his work.
By appreciating their work, you are making them feel like they're not just an employee but rather a key employee, and that they're in that position for a purpose. Not only will this have a positive effect on an employee's performance but also on the relationship between the boss and the employee.
Appreciation comes not only in words but in incentives for every job well done. Nowadays, we see a lot of workers rallying and protesting against the company their working for because they have been deprived of the benefits they deserve. This is what will happen when a company does not listen to the voice of the workers, and do not take time to appreciate and value them.