When I worked at Google, a peer could recomend you for outstanding work. You’d get a small bonus too. Someone did this for me once. Even though I was in debt at the time, the fact that someone went out of their way to praise me was far more valuable to me than the money.
You should compensate people what they’re worth, that goes without saying. Getting a raise is great. Telling people they’re doing a good job means a lot to a person making the effort. If somebody is working hard and doing good work, they deserve to be praised for that. You’ll feel good too.