The Root of My Resistance - Performance

I am in the midst right now of developing performance standards. We recently transitioned from basically a pass-fail system to a 5 level system where ratings range for Outstanding to Unsatisfactory. We are required, by the Master Agreement and sound performance management principles, to develop definitive standards of performance at the Fully Satisfactory and Exceptional levels.  Makes perfect sense, an employee needs to understand the expectations in order to succeed. How can you help or expect a person to develop and grow and be successful if you as their supervisor can't articulate what it takes to get there. I got that, totally and completely. I know Exceptional performance when I see it and have gone through the process of transferring my thoughts onto paper.

The place where I get stuck is the tolerance for error or "allowable quota", e.g. how many times can they not meet the standard and still be Fully Satisfactory. Every time I go to put a number in there, I can feel the resistance rising and I just don't want to do it. Why not? I am not quite to the root of  my resistance but the main thoughts racing in my head now are:

• I don't want to be boxed in. I may have two people who exceed the allowable quota and the scope or impact of the instance are very different and I want the ability and flexibility to consider that in my evaluation. Someone may exceed the allowable quota and that may be the only area where they are not excelling and, all things considered, that does not rise to the level of a person has not exceeded their quota for error yet is right on the edge in every area. 
• My staff, and most of the staff across the medical center, are knowledge workers and their achievements are more quality than quantity based.  Trying to successfully quantify quality is a challenge. For me, it feels as though I am, in a way, reducing it to the lowest common denominator. 
• Why can't we all be adults and talk about performance based on data and results achieved without reducing it to numbers of errors or a specified percentage change allowed?

I want to be able to give employees the benefit of the doubt and conversely to hold them accountable for their performance. I am struggling with the best way to do that for my employees and to advise other supervisors in doing the same.

I think it will come down to a matter of perspective or approach and I am in the inquiry now.