Team Recognization

Balaraman, velocity should never be looked at as a KPI.   It is simply a planning metric for both the PO and the Development Team to use as they see fit.

Team recognition is always a good thing.   Meeting their Sprint Goal, completing sprint forecast, and successfully implementing improvements are just a few areas that would serve as good reasons for team recognition.

I'm not sure though about your reason for recognizing the team.   A metric improvement around productivity doesn't always indicate that the team is getting better in Scrum.   

Perhaps the team is getting more items done, but are they producing more value to the business?   Are they delighting their customers more?   Or are they just creating more "stuff"?

In addition to Timothy's worthy comments, if you reward and recognize a Development Team for improved velocity, how likely will point inflation and gaming of numbers be?

@Timothy and @Chris provide very good points that you should consider.  I'm going to give you a real life example.

I currently have 2 teams that have been together for most of a year.  In the beginning their estimation was up and down so their velocity was really variable.  Over time, they got more comfortable with the work they are doing, got better at estimating as a group and their estimates started to come together better.  At that same time, their velocity started to settle in to a pattern.  It did raise a little more after that as they got even better at refining.  All through this I also tracked the number of stories that they were completing.  It stayed almost flat all through the chaos associated to the velocity. 

As the others have said, rewarding velocity is not a good idea.  It is a metric based on estimates (i.e. guesses) and if rewarded there, it could easily be influenced by just estimating everything higher.  I'd suggest rewarding other things like accomplishing Sprint Goals consistently, positive feedback from the stakeholders on the increments delivered.  Tie the rewards to the value that they are delivering and not their ability to estimate.

Recognizing particular team as Efficient which has reached 15%+ improvement over your target Velocity KPIs over 3+ sprints is correct ?

It doesn’t say much about any improved release of value to stakeholders. Do you think it is likely to be correct?