I have written before about grades. Our faculty is currently struggling with what a grade means. Is it a measure of mastery, compliance, or behavior?
I would love a system that did away with grades all together. I do not feel the grade is a measure of our learning. This fall I did a badge system in freshman seminar and did not grades. I'm not convinced that system is any better. While it removed grades as a "carrot/stick" it really just replaced it with badges.
If you have a grading theory that you like please post a link.