This module is one in a series of seven focused on skills vocational teachers need to develop and manage programs that are performance-based and fully individualized. Designed to allow for individualization of a teacher education program, these modules supplement those prepared by the National Center for Research in Vocational Education for professional development of vocational teachers. The objective of this module is to help develop skill in establishing a rational grading system, one that has an outcomes orientation. Focuses are the difference between norm-referenced grading and criterion-referenced grading and development of a grading system that compares students to an absolute criterion when determining their grades. Contents include two learning experiences based on two enabling objectives that provide background information, practice experiences, or a combination. Completion of these experiences should lead to achievement of the terminal objective in the third and final learning experience with teacher performance assessment form. Each learning experience includes a learning activity (activities) with information sheets, case studies, and self-checks with model answer (as feedback). Optional activities may also be provided. (YLB)