My guess is that it's more likely grades are used as leverage, lorded over students as a form of academic "justice"; rewards go to the high-achievers while punishment is doled out to the offending slackers who didn't get the work done.
When it comes to what we know about the nature of learning, though, letter grades fall short in fostering, within our students, a willingness to think about, discuss, and reflect on their learning. For the most part, there's no solid sense of the why behind them or what was learned as a result, so it's no wonder that high-achievers are hyper-focused on them and struggling students avoid them (and the loser-tag they exact).
Learning is a process that needs choice, voice, reflection, timely feedback, and opportunities to revise in order to grow, but points awarded for simply completing tasks (we'll call them giddyap grades) convey the opposite. They're more about getting things done so they likely represent a student's level of agency rather than where they're at with the content. The problem is that no one would really know for sure, including the student, who sees an A, and thinks "success!" and sees the F and thinks, "Oh dang, no cell phone for a month."
Dan Pink makes the case that the carrot and stick approach motivates people when the work is menial, rote, or mechanical. In other words, if the task doesn't require any specialized knowledge or ability, rewards and punishments increase motivation and productivity. But when the tasks require even the most rudimentary cognitive challenge, increased incentives have the opposite effect.
Autonomy = the desire to direct our own lives
Mastery = the urge to get better at something that matters
Purpose = the yearning to do what we do in the service of something larger than ourselves
Now, take money out of the equation and replace it with grades. Notice how Pink's definition for mastery jives with growth mindset, where all endeavors are viewed as practice, and where failure is merely an opportunity to learn rather than grounds for punishment. If I can make mastery the focus of the work we do, but do so within contexts that are meaningful to my students (purpose), where they set their own goals, work at their own pace, and assess their own gains (autonomy), then yes, I can make that almighty letter grade work to my advantage by challenging students to give themselves the grades they deserve. They'd use their body of work, feedback, and their reflections to make that case. That would be the only time grades would come into play and it would be on their terms.
My gut and my experiences tell me this is possible and it's the right direction for me to move toward. It's already being pioneered by teachers who are generously sharing their journeys and inspiring others to do so (see Starr Sackstein here and Mark Barnes here).
I don't call this blog EduNut for nothin'. I'm obsessed with teaching, and so a lot of my personal time is spent striving to build on what I know. It's a weekend morning and I'm wrestling with pedagogy on the pages of my blog, obviously driven by a sense of purpose and a desire for mastery of my craft. Pink's ideas resonate with me because I can easily see how they play out in my own learning. I want to replicate that for students.
I'll be transitioning to as close as I can come to a "no grades" assessment plan for next year. I still have to ultimately place letters into that grade book at the end of each term, but at least I can do so in a way that honors my students' work and progress more authentically than not.
Beginning in late-May, I'll be blogging and vlogging to make it all transparent as best I can (Sackstein-style). I'm excited and nervous at the same time. In the past, those two feelings together have always preceded the crossing of a meaningful threshold in my life or career. 'Tis a good sign.