Grading schemes to encourage effort I'll be teaching a graduate-level mathematically oriented class with probably less than 20 students. I have to grade the students (our system doesn't allow for pass-fail grading), and while I don't want to be overly fussy about the grades (this is after all advanced level material and mostly Ph.D students), I would like to provide some incentive structure so students will do the classwork and hopefully learn something in the process. 

One possibility is "coarse-resolution" grading where in each homework, the possible grades are +, 0, -, where + denotes having done about 75% or more of the work, 0 is between 50 and 75%, and - is below 50%. 

At the end of the semester, the number of +/0/- determines the grade, with "mostly +" getting an A, "mostly 0" getting a B, and mostly - getting a C. 

Is this likely to be effective ? Is there something else I should do ? I'm open to the idea of not grading at all and giving out dummy grades, but I do think that people who put in effort should be rewarded in some way.
One approach is to have a number of clear learning objectives. For example: 


  At the end of this course the student will be able to differentiate functions of a single variable. 


Then for each of these provide a description of what it means to obtain each of the various grades available.


  F: The student does not grasp anything about differentiation.
  D: The student is able to differentiate simple functions.
  C: The student is able to differentiate many functions, but has difficulty with composite functions.
  B: The student is able to differentiate most functions and employ the chain rule.
  A: The student is able to differentiate all functions and can apply first principles.
  A+: The student employs novel approaches to differentiation.


Of course, you'd need to tailor these to your course and make them more precise than mine.

The learning objectives and the descriptions of what each grade means can be given to the student. A course may have different learning objectives, each with their own description. Your assessment can be tailored to measure the learning objectives based on these criteria.

The idea, apart from making your job of assessing more objective, is to replace scores by learning objectives, so ultimately the course will not be about scoring points, but learning.
You could even disassociate the grades from the learning objectives and replace them by unsatisfactory, satisfactory, good, very good, excellent, and fantabulous.