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Although this may seem obvious, students often complain that there is no connection between the stated course objectives and the way they are evaluated. For example, one frequent lament goes something like this: "Professor X said the most important thing he wanted us to get out of this class is to be able to think critically about the material, but our entire grade was based on two multiple choice exams which tested our memory of names, dates, and definitions!"
When preparing your grading system for a course, begin with a list of your objectives for the course. Assign relative weights to the objectives in terms of their importance. Be sure the items you are including as part of the grade (e.g. exams, papers, projects) reflect the objectives and are weighted to reflect the importance of the objectives they are measuring.
Because the purpose of grades is to communicate the extent to which students have learned the course materials, grades should be based primarily on the students' performance on exams, quizzes, papers, and other measures of learning specified at the beginning of the course. Such items as 'effort', 'attendance', or 'frequency of participation', although contributing factors to student learning, do not actually reflect the extent to which students have learned the course materials.
If you are willing to offer extra credit, or opportunities to retake exams or rewrite assignments, the offer should be made to the whole class rather than only to individuals who request these opportunities.
It is rarely justifiable to base students' grades solely on their performance on one or two exams. Unless the exams are extremely comprehensive, one or two exams would provide an inadequate sampling of course content and objectives. There is also a likelihood that an off-day could lower a student's grade considerably and be an inaccurate reflection of how much s/he has learned. Generally speaking, the greater the number and variety of items used to determine grades, the more valid and reliable the grades will be.
If you say that an exam is worth 15% of the total grade, use a procedure for combining scores that ensures that this will be the case. The University of Minnesota Office of Measurement Services can help you find an appropriate procedure.