By ignoring poor performance they are putting extra pressures on others, sometimes the best performers. Resentment is growing. One doesn't have to be a rocket scientist to predict the likely result in the long term. Where a manager does not want to seem demanding of their people, staff are often left in a situation where they are not clear exactly what role they are sup-posed to be playing, or what they need to do to do well. This causes dissatisfaction.
Clarity is important.
Clearly define what the job is in the first place, so you can clarify the right person for the job and you are more likely to hire the right person. In modern organisations you involve your employees in the job description conversation. Don't either impose a job description or think you are being empowering by leaving it all to them. Know the law and have a good legal advisor just in case, but work to improve the situation. It's best to respond quickly, firmly but not aggressively.