The answer is that nothing is being done about it because your manager isn't doing her job and is allowing her desire to be nice and avoid difficult conversations to trump her fundamental obligations as a manager—obligations like holding the bar high and expecting people to adhere to it, warning them when they're falling short, and taking action when warnings don't work.
No one likes to fire people. But firing, at its core, is about a fundamental commitment to having great people. If you believe that having good people makes all the difference in a manager's ability to get results—and it does—then a corollary has to be that some people will need to be removed. You can do everything else right—setting ambitious goals and clear expectations, delegating effectively, giving feedback, and so forth—but if you are unwilling to fire people who aren't performing at the level you need, you will never accomplish what you could.
Yet the vast majority of managers err on the side of not firing when they should, and their organizations suffer as a result. I've certainly been guilty of it myself and have realized many times after the fact that I should have acted much sooner, especially after eventual replacements demonstrated the opportunity cost of not having had stars in the jobs all along.
So, why don't managers fire when they should?
Ultimately, though, the above "reasons" are really all excuses. The most common reason managers wait too long in these situations is to avoid discomfort or hassle. And just as when dating someone who you secretly know isn't right for you, putting off the day of reckoning is unfair to the person who could be using this time to find something that is right.
Alison Green is chief of staff for a medium-sized nonprofit where she oversees day-to-day management of the staff as well as hiring, firing, and staff development. She is working with the Management Center to coauthor a book on nonprofit management. Her writings have been published in the Washington Post, the New York Times, Maxim, and dozens of other newspapers. She blogs at Ask a Manager.