Literally: discourse – achievement – conduct – reward
Alternately: Awarding honors, prizes, or praise based on someone’s work and achievements. The meritocratic ideal.
Notes: This phrase comes to us from the “Book of Wei” in the Records of the Three Kingdoms (Japanese 『三国志』 = Sangokushi), a massively influential history of, well, the Three Kingdoms period in Chinese history. The four-character compound can be expanded to (or simply read in kanbun style as) 功を論じ賞を行う (kou wo ronji shou wo okonau), which neatly illustrates the way in which it is a compound of compounds: 論功 is “discuss the merits,” and 行賞 is “carry out rewards / awards.”
Despite how intuitive this may seem, some people may trip up on the doubled sound and write the final koushou as 功賞; this is an error.
While a bit more focused, this phrase is considered synonymous with 信賞必罰.