IMHO, there are several problems with any scheduled review system, not the least of which is that it is scheduled. Professionalism and/or quality of work (or lack thereof) is not an annual affair, it is a day in and day committment. Why wait a year to tell something that they're doing a great job? or that they need improvement in certain areas?
As an analogy, have you ever noticed the subtle differences in TV programming during ratings week?
A good manager will identify and discuss problem areas as soon as they are identified. If a problem is identified is January and corrected by February, what is the point of rehashing that at the annual review in November or December? Nor should you wait until then to document and/or praise the improvement. If in March, the problem has still not been rectified, why wait until the annual review to again address the issue. This should be an on-going process, not relegated to an annual event.
Most employers don't want to keep the negatives on file for a couple of reasons. First, once the behavior has been corrected, it's history and you move on. Rarely does it serve anyone's best interests to keep these black marks in the file. I'm not talking about major screw-ups that need to be documented, but rather, the day to day improvement areas and/or behaviors that we all suffer from that we can work on. Secondly, there is always the litigation issue and there is always subjective judgments involved and it comes down to a he said/she said condundrum. At the end of the day, it's a no-win situation.
One area that many like to engage in as part of the annual review is the "goals for next year." There is some validity to that, but if these goal are not consistent with the business requirements and obligations, then the company is not in a position to help you reach your goal. Now, here comes next year's review and well, you didn't reach your goal. It's not your fault that the company did not get a project that allowed you to work on your goal, but now you have a documented failure to reach goal in the annual review. Unfortunately, the reason why the goal wasn't met doesn't mitigate the fact that the goes wasn't met.
Annual performance review are wonderful on paper (just ask any MBA), but in practice, they are so fraught with ambiguity, misunderstanding, subjective interpretation, and whitewash, that they fail to serve their intended purpose.
Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein