I always start with a couple of observations:
1. Vocabulary is the single most important element of a student's language learning. It is underneath all of the reading skills, listening, grammar, speaking, etc. It's basic. And they need to not only know the meaning of the words; they need to know the grammar, and the forms, the sound, and how words are used. They need to be totally familiar with the words. One proof of the central nature of vocabulary is that in any given term, students can do well on vocabulary, listening, reading or grammar separately, but those who do well on vocabulary are most likely to do well in the others, and to pass the TOEFL. Vocabulary is a better overall predictor of the other kinds of success than any other single predictor (I know this from experience, but I also heard it someplace long ago, and haven't been able to track it down).
2. Most students need a system to study vocabulary. Some teachers believe that enough exposure alone will be enough, but my experience is that it won't be. I encourage students to take responsibility, to have a system, to make sure their system is all in English, and to recognize that systems for studying vocabulary must change from lower level to higher level. The system I recommend has room for a word, definition (in English) and a sentence using the word. Simple sentences can be found from their readings or from an ESL dictionary. Students should study by reading the sentences, and looking at the definitions only if necessary.
3. At the intermediate levels, students have trouble not translating every word. In other words, if they translate as they read, their grammar gets confused; it takes too long; and they lose track of word forms or things that don’t make sense from one language to another. Staying in English, in their minds, is harder at first, but ultimately beneficial and more efficient. Their vocabulary system should help them with this process, not reinforce the habit of translating every word. I always ask them: what is your system? Is it working? Are you able to stay in English as you read?
4. I encourage a number of other habits. Grab words from many sources and put them on the list. Mark the bilingual dictionary whenever you must use it (this puts a price on using it). Study vocabulary as often as possible. Revisit the question of what system is working and how well it’s working as often as necessary: it is, after all, their business, not ours.
In class, I follow a simple process. Every word that we see or read is testable, but we're only interested in the more important ones, the ones that everyone has trouble with. If they have trouble with one, or if it's important, it goes on a list which is then given to the students with plenty of time. When the list is over 24 (or about 3 per student in groups of 8), it is time to play the game. I have access to English-language definitions of the words which I generally don't show to students, though I could. Words are written, half-sheet of paper each, in magic marker on large colored paper; definitions are written on much smaller stripped paper which students can then pass along to each other. I start by giving each student three; if a couple of them have four it doesn't matter unless there are serious prizes for winners.
As the game starts I show each half-sheet and say the word; students, who are in a circle, can all see the sheet and hear the word at the same time. The game is fast; I give them no more than three or four seconds to get the definition. If students get it (they call out "mine", "got it" or the definition), they are rewarded by having that definition taken from them (when they run out, they win). Students then pass one definition to the right (students will take this advantage to pass along a definition that has been rendered useless, but that's ok; it's part of the game). The game proceeds until a player runs out; that player is the winner and gets some favor to be determined by the teacher. On a larger scale, I remember which words are gotten first-time by the students, and when that happens twice, the word is removed from the game, as new words are added on to it.
Thus the game is a regular, every-day activity that takes no more then 5-10 minutes, allows me to rearrange the chairs, and reinforces the general idea that vocabulary learning is a constant, everyday kind of activity.
I then put the vocabulary into simple quizzes, that test only the meaning, but in which the sentence given to them does not give away that meaning. The point of the quizzes is simply to see if they can carry that meaning around with them, though, in the lower level classes, I give them warning thus letting them study.
I make no restriction on how they study; I don't collect the list, or look at their sentences, or enforce the way they go about it. That's personal, I tell them; all I'm concerned about is that they know the meaning when the term is over, or at any given time in the term. By the end of the term, however, my list generally has hundreds; they are responsible for them all. And they need the English-language definitions for them. Generally those who study using native-language translations have trouble with this; I often see their study sheet as it is out right before the quiz. I can tell who studies, who doesn't and how they study, so I see patterns in students who succeed and those who don't.
I often point out, when I see an English-native list, that this kind of list is appropriate for a lower-level learner (what else could they do?) but is not appropriate for an upper-level learner. I leave it up to them; I don't want them hiding their study sheet from me; but, I tell them that their way of studying will be a constant issue in their learning and that of course I am interested in what they are doing and how well it's working.
I explain that teaching oneself to always translate every word as one reads is counter-productive; thus it's necessary to use one's system to teach oneself not to. I often explain the translation plateau (see note), and why, at an intermediate level, one should take control of vocabulary by using it often without translating. People who can't, read too slowly and have problems with word form.
Still, I don't pressure them, aside from ensuring that they put away their study list before they take the quiz. Then, I also notice the correspondence: students who do well on the grand vocabulary, at the end, do best in the class, and, especially, on the TOEFL. That end-of-term vocabulary score is the best overall measurement of their level as a student, of all the other measurements they are subject to.
Assure your students that their vocabulary acquisition is the most important element of their learning.
Assure them that there is no way you, as a single teacher, could give and test enough vocabulary to ensure their success.
Hold them responsible for every word they encounter; recycle them if possible; make sure they know each one, the second time around.
Keep tabs on their personal vocabulary learning; either they are picking it up as they go, or they aren't. If not, why not?
Students need a balance between deliberate memorization and active use of words. Too much of an imbalance will not work and will cause them to waste some of their effort.