Previously I had attended a school that had, what I thought, was a good way of ranking children.
The instructor had several rolls of different colored electrical tape. Each color stood for a different area that we teach. Kicks, Punches, Stances, Forms, Grab Defenses, Club Defenses, Combinations and Kempo Techniques. (The school system was a Persare/Cerio/Vallari derivitive). Although you could always add things like Animal techniques or knowing the school rules.
Every month, one class day would be a testing day. Everyone in class that day would be tested. The format of the test was much the same as the one given when a Master instructor came in to do Rank testing.
At the end of class, some of the students would be awarded a stripe on their belt if they had mastered the skills necessary at their rank. So, a few of the students might receive a stripe for their kicks, while others may recieve a stripe for forms. Once the student has all of their stripes they are eligible for the next Rank testing.
There were several parts of this that I liked.
1.) Since students are rarely put up for Rank testing when they have the potential to fail, we often get used to always passing a test. With this extra testing the students get used to the fact that they will not always pass every test they face. I've seem some young kids go for 3 or 4 months before receiving that final stripe for their rank.
2.) It gave the young children, especially those who were at the intermediate ranks, a more short term goal. In my limited experience some kids had trouble waiting for the 5 or 6 months between ranks. By having a monthly test to prepare for, the kids had a numerous goals to reach. All of these goals were often explained as steps on the way to black belt and beyond.
3.) It provides a way to slow down the rapid climb through the ranks that can occur. I have seen many schools with 10 year old black belts. That just seems kind of young to me. Especially when you consider the drop out rate after black belt is rather high. This method give the instructor a way to space out the ranks while still rewarding skill development. It helps add some time to allow for emotional maturity along with physical skills.
4.) It sometimes helps an instructor to know who has what skills for their rank. I know most of us know our students rather well, but sometimes a little help in tracking is not a bad thing.
Hope this helps.