Why Do Managers Refuse to Do, or Procrastinate With Annual Performance Reviews?
Obviously performance management, or annual reviews, can "work" if they aren't being done. It's unfortunate that often, managers stall, or procrastinate, or simply avoid doing some or all of the performance management steps. If the goal is to improve the value gotten from performance management, obviously we need to understand why managers don't do them.
There are a number of reasons why managers stall, or avoid the process, from feeling that they don't have time, right through to being uncomfortable with the responsibility for discussing employee performance, particularly poor performance. But, we can boil down all these reasons into one, useful reason.
Most managers do not understand what performance management is for, and most important, how they benefit by investing the time to do all of the steps.
Basically, people do things when they perceive that the "cost" (time, money, discomfort, etc) is outweighed by the benefits THEY will receive. There are certainly a number of benefits for managers of doing performance management and annual or more frequent performance reviews, but they are not all immediately obvious, since a number are longer term. Manager's can have some limited understanding of why Human Resources wants it all done, but they don't understand why they should do them in terms of the benefits they receive.
Is it so surprising that John, the manager, or Susan, the VP, doesn't take the time to manage performance with his or her subordinates, when neither John or Susan understand what they will gain from the process? Of course not.
See Also: Why Is Training Important In Improving Performance Management Systems?