It may start with a clearer understanding of the employee's work. Some bosses I know think they "run" the company with a small contribution from the staff they allow to work there. That's obviously not the norm, but I have seen it. Recognition comes day to day, you give praise as soon as you can, you see a staff member's strong points and perhaps offer further training in that direction.

If no one's getting paid what they're worth, bringing in bagels isn't going to help the situation (in fact, it may be seen as a slap in the face if the boss can easily afford this kind of generosity but the staff is struggling financially). But if the boss sees everyone is staying late all week to meet a new project's deadline, bringing in pizza each evening or buying everyone a nice lunch at the end of the project helps.