What are the different performance appraisal methods?

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What are the different performance appraisal methods? Pick two: the one you find to be MOST effective (and tell us why) and the one you find to be LEAST effective (and tell us why).

For the most effective, explain how it is effective in doing the following:

providing fair and reliable ways of differentiating employees;
targeting and rewarding those who most deserve it;
setting forth a fair and cost-effective plan for compensation; and
motivating and ensuring performance of employees.

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