Grading systems -- how do you grade?

I just saw a post by Kevin Werbach that links to a post on the grading system used by Liz Lawley -- she gives only three grades: A for "good work," C for "mediocre but acceptable work" and F if "they really hadn’t mastered the material."

That got me thinking about grading. I will tell you how I grade and would like to hear how you grade.

For final grades, I curve students relative to the top person in the class, so they are not competing against each other. I also put them in heterogeneous groups and give significant bonuses to groups with low-variance, encouraging them to help each other.

Part of their grade is based on assignments. Since I give a lot of small, focused assignments, I had to devise a grading system that did not take a lot of time. I grade assignments as satisfactory and on time, satisfactory, but late, or not satisfactory. They get full credit for assignments that are satisfactory and on time and half credit for those that are satisfactory, but late. If they are not satisfactory, I explain why and they have the opportunity to re-submit a satisfactory answer for half credit. This method makes grading relatively quick and encourages students to keep up.

But, I am still grading at the course level, which is inappropriate for many subjects. For example, to say that someone received a C in an introductory statistics course means they did not learn significant parts of the material -- perhaps understanding descriptive statistics, but not hypothesis testing or estimation.

Instead of one grade, I'd prefer a fine-grained system in which one could, for example, pass "measures of central tendency," then "measures of variability," then "basic probability," etc. In that case, "passing" an introduction to statistics would mean passing each of a series of ordered modules and understanding all of the concepts and skills presented in the course.

I've advocated and used modular teaching material for many years, but always within the confines of the standard grading paradigm -- assign a letter grade from A to F for an entire course. With today's technology, we could combine modular teaching material with pass/fail grading at the module level. The technology is the easy part. Breaking up the traditional transcript -- our current system of grading and certification -- would be tough.

But, enough blue sky dreaming -- I am curious to know how others grade. I've outlined my grading system and that of Liz Lawley -- how do you grade?