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How to create grading system for tech team from scratch

In every tech company, clear grading systems are crucial because they establish a transparent framework for evaluating performance, setting expectations, and identifying areas for improvement. Such systems not only ensure that individual contributions are measured against consistent standards, but they also help create an environment where employees understand how their work aligns with the company’s overall objectives.

Grading systems are not merely HR tools; they enforce tech priorities, cultural values, and company-level strategy. Employees continually measure themselves against the metrics defined by these systems, which directs their attention to specific aspects of their work. By selecting the right—or conversely, the wrong—criteria at the individual level, you can steer the company toward positive or negative outcomes.

Grading systems have the ultimate power to shape and guide people’s way of thinking.

With this guide, you’ll be able to build your own grading system in just one day. I’ve refined this approach over the past few years, testing many different frameworks and finding them heavy, excessive, and hard to manage.

Foundations

A grading system starts with your long-term strategy and personal belief system. What you believe can drive your project to success. Are you planning to grow a small team of independent, autonomous AAA players, or are you looking for a team of executors who can perfectly follow the guidelines defined by a small group of genius managers? Is speed more important, or do you prefer quality and bug-free products?

Your team is a natural extension of your belief system—your values and virtues help you choose the traits you want to cultivate in your team.

Remember that the project you are working on evolves over time, and what worked well four years ago may not be effective today. Startups demand speed, while expanding businesses require quality and predictability.

The third factor to consider is your tech vision. What does the ideal technical feature of your project look like, and what kind of tech expertise is needed to achieve that future? Do you believe native mobile apps or React Native is the way forward? Should you go full stack, or do you still prefer to see back-end and front-end experts working separately? Will your engineers act as devops, or will you need a dedicated devops team?

Putting all these elements together, we can identify three key factors that form the core of your grading system:

Criteria and scales

Now, after we have defined our north star we will be moving towards, we have to define key criteria and measurments for these criteria.

Grades

Grades refer to the distinct categories or scores that indicate an individual’s level of performance or achievement. In a grading system, these grades are assigned based on predefined criteria.

Grades should be transparent and clear for everyone. The relations between grades and criterias should be public and available for review and questions for all team members.

Grades should also offer varying career opportunities for people with different attitude and mindset. For example, in some companies, in order to have a career growth, engineers must become managers and team leaders. But not all engineers can fit into this career trajectory - they may be enjoying coding and software architecture, they may be introverts and not people-centric. But career trajectories, offered to these people by business, may be pushing them towards manager role. And that’s how the company looses a brilliant individual contributor and receives a manager that is not qualified and happy to be in a manager position.

How to assign grades to your team members - step-by-step guide

Step 1 – Define Your Vision, Virtues, and Values

Before you promote growth within your company, establish a clear direction. Define your core beliefs, strategic goals, and the current stage of your business. This foundation sets the tone for the evaluation process.

Step 2 – Choose the Right Scales

Once you’ve identified the key parameters to measure, select scales that accurately reflect these criteria. The scales should be tailored to the aspects you want to improve within your team.

Step 3 – Define Grades

Establish a clear grading system and hierarchy within the company. Consider the following:

Step 4 – Create Assessment Forms

Implement a 360-degree review process where each team member is evaluated by multiple perspectives. Develop standardized, easy-to-fill forms using simple tools like Google Forms or specialized review software. This consistency ensures everyone is measured against the same criteria.

Step 5 – Conduct the Review

Distribute evaluation forms to collect feedback from:

Include a self-assessment component to encourage reflection and establish a baseline. Standardized forms—ideally with anonymity—will help secure honest and constructive feedback.

Step 6 – Assign Grades

After collecting all forms, consolidate the data using a tool like Google Spreadsheets. Then, compare the evaluation results against pre-determined thresholds.

Mapping the results against these benchmarks will allow you to confidently assign grades.

Step 7 – Communicate the Results Privately (1-on-1)

Hold individual meetings to review the outcomes with each team member. Discuss:

These conversations should be handled privately to respect each employee’s confidentiality and provide a safe space for discussion.

Step 8 – Communicate the Results Publicly

Once individual reviews are complete and grades are accepted, share the overall outcomes with the entire team. Make the questionnaires, scales, and methodologies accessible so that everyone understands how evaluations were conducted. This level of transparency builds trust and reinforces your company’s commitment to fairness.

Example - how I build grades from scratch

For obvious reasons, we won’t cover all steps in this example, but anyways we are going to build the key elements of the grading system together in the way I did it before for one of my projects.

For sake of speed, we will be measuring only software engineers in this this example, but the are usually also DevOps, QA and other folks to access.

Step 1 – Define Your Vision, Virtues, and Values

In my engineering teams, I value:

Step 2 – Scales

Now we have to define scales. As we remember, scales should be very definitive and leave no places for interpretation.

We are going to measure all 5 parameters I’ve defined above. Hard skills will be broken down into multiple other skills. I also usually give code to every scale I measure, it makes easier to refer to scales in values in the future.

Autonomy (SOFT-AUT)

Industry Knowledge or Ability to Grasp It (SOFT-IND)

General Soft Skills (SOFT-GEN)

Culture (SOFT-CUL)

Since we are talking about software engineers, we have to define some scales for hard-skills.

Code (HARD-CODE)

Here language is not specified. This scale just demonstrates and approach.

Ability to Operate and Work with PostgreSQL (HARD-DB)

DevOps Abilities (HARD-DEVOPS)

I believe that complex systems should be operated by dedicated DevOps engineers, but all engineers in the team should be able to manage basic DevOps tasks.

Step 3 – grades

I believe in flat structure, hence I usually don’t have many grades around. I’m also using two separate career tracks for those, who want to be managers and for those, who prefer hands-on tasks. I also don’t have junior grades because I’m not hiring juniors. It’s because I’m working mostly in relatively small (in terms of workforce) teams which can’t afford to hire junior engineers.

Also you can notice I have strong emphasis on soft skills starting from smallest grades.

By Andrei Korchak


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