Virginia Tam,
I also believe that the positive approach works.
We have a "Golden book" at our school. Any child doing something like trying really hard at something they find difficult, being caring etc has their name and the reason put into the book.The names are read out in our "sharing assembly" at the end of the week.The children can nominate each other - and do so regularly when they notice something kind or helpful.
The children come out to the front of the hall and are given a round of applause. This appears to mean more to them than earning merit certificates.The older children are particularly good at recognising the progress of the little ones in terms of caring and sharing.A little boy who has behavioural problems was nominated this week by a year 6 boy - because he had noticed him playing really nicely and sharing his toy. This was something which had previously been very difficult for this particular child.
I believe that on the whole, children value this feeling of belonging , knowing everyone and being valued for who they are.
Unfortunately this type of progress is not really recognised or valued by the powers that be, because it can't be measured and reported on.