Probably the most difficult task of a technical manager is evaluating performance of people in the team. The main goal of performance evaluation is to provide feedback to employee and to help him align his interests with the interests of the company. By not providing feedback, both the employee and the company are loosing a great opportunity for improvement. Maybe it is due to the difficulty of the task that I've seen so many technical managers devising elaborate ways of avoiding the issue of performance evaluation. The most cowardly way of avoiding performance evaluation is to just start ignoring employee whose performance you deem inadequate. I've seen this being done to my coworkers at several of my past jobs and it has also happened to me ten years ago at one of the top Slovenian IT companies. My boss at that time, while being a great expert, had no management talent whatsoever. Since I failed to guess his intentions, at one point he just started ignoring me and I've never spoken with him again even though I've worked for that company for several months more.
The second elaborate way of avoiding performance evaluation is to develop objective measurements of performance through standardized measurements and questionnaires. While performance evaluation should not be dependent on whims of a manager, the manager should take personal responsibility for the results of the evaluation. Providing employee with a standardized response (e.g., your performance is 87%) might be suitable for workers at the conveyor belt, but it is entirely inadequate for knowledge worker. There are so many factors defining performance of a knowledge worker, that it just isn't feasible to capture them into a few standardized metrics.
The next very popular way of avoiding performance evaluation is to do it only once the problems get out of hands aka. "management by incident". In this approach, everything seems to be fine and there's lots of back-patting involved. But under the surface, the conflicts and resentments are accumulating and they burst out all at once with drastic consequences and with detrimental effect to everyone involved.
Performance evaluation is far from easy, but it is essential for growing a healthy team. If you know effective ways how to do it, please, describe your experience in the comments.