In a series of studies Carol Dweck (with C. M. Mueller, 1998) found that praising students’ abilities conveys “that their ability is a gift and makes them reluctant to take on challenging tasks that hold a risk of mistakes.”
I recently read Why Aren’t More Women in Science?, which a was surprisingly interesting, especially as learned scientists and researchers come to different conclusion to answer the question posed in the title. There is a lot of interesting information in there about behavioral science and I recommend reading it if you are interested in technology, women in technology, and the recent push for STEM instruction in schools.
However, I found the results of Dweck’s 1998 study to be surprising and contradictory to almost all advice in both teaching and management. What Dweck discovered though, actually makes sense. If you praise an individual for an innate ability (talent, intelligence, etc.), then she may be reluctant to risk losing your esteem in her that you have suggested is related to something that she cannot change.
This doesn’t mean you should’t praise people though. I think that what Dweck suggests is that you should praise people for what they’ve accomplished — for a job well done — rather than suggesting that they are naturally good at it. As I’ve tried to look at my practice of praise (which I continually work on) I find that this is hard, because I want to recognize individual strengths (First Break All the Rules was my first management bible).
 Mueller, C. M., & Dweck, C. S. (1998). Intelligence praise can undermine motivation and performance. Journal of Personality and Social Psychology., 75, 33-52.
 Dweck, C. S. (2007). Beliefs That Put Females at Risk. Why Aren’t More Women in Science? Washington, D.C.: American Psychological Association.