Grading... for me it is actually a bit of a pain. I can't fit it into that system of letter grades. With a number system you have more spectrum but it still can't fill it out in all circumstances
What do I consider in a grade? A combination of work ethic, love of the territory (passion), talent activated and potential not realized, attitude, progress or lack there of. The other consideration I wrestle with at times is, do I compare a student to all the ones I have had to make the grade? That would lower a lot of peoples grades because I have had some pretty extraordinary students!
So now we get into levels. If someone is a freshman at a music school like a conservatory, (I know this is general), and they have a certain goal in mind, the question, is are they working at their full or close to it capacity to get that to happen? Or, what about a senior that has a terrific potential but really has not significantly improved? What about the student that maybe wasn't given a terrific first stage (the potency of the natural talent) but has worked extremely hard consistently throughout their schooling and has made very good improvement but still is 'behind' in certain areas that will hold them back in a performance career?
So the subject matter can get very complex at times, but for me, it does come down to the person owning up to the fact that they are the ones that have to work for it. Not to please me, their parents or anybody else. But for themselves because they are moved to do so from the core of themselves. Even this level has several variations to it, but effort + talent + attitude + work achieved = grade, in most cases.