Standards constitute performance goals and should be defined in terms appropriate to the relevant method of measurement. Where comparative data are available, a department might define standards in terms of the percentage of students at or above a particular percentile. Missouri’s funding formula awards universities for the number of students scoring above the 50th percentile on nationally normed tests in the major. I have heard credible arguments that this is a stupid measure of success. An individual department, however, might have good reasons to state that all of its students should score above the 50th (or 65th, 70th, etc.) percentile on a standardized test in the major--provided that this is a meaningful expression of standards. Departments with licensure exams might want to state that no fewer than 95% of its students will pass the exam on the first attempt. And departments with a criterion-referenced capstone project (or internship evaluations based on specified criteria) might want to state that all students will receive at least a satisfactory score in each criterial area with 30% performing at a level higher than satisfactory.
Performance-based assessments present specific problems. Though standards are usually written into scoring criteria, performance-based assessments have little credibility unless results are analyzed by comparison to performance of students outside the department, by external review, or through conscientious discussion among faculty of the relative strengths and weaknesses of student performance. The Art Department’s evaluation of senior projects is strengthened by the fact that it employs an external judge, as is the evaluation of a department that identifies areas of weakness indicated by particular measures (for example, relatively weak understanding of the hypothetical method as indicated by performance in the senior portfolio) and proposes actions to strengthen them (for example, holding a department faculty workshop on teaching the hypothetical method). Whatever your approach, remember that statements such as "All graduating students passed the department’s exit exam" are not credible indicators of standards unless supplemented with appropriate analysis, interpretation and follow-up.