It's not like management will just let the employer keep underperforming. They'll secretly PIP them, let them continue on their course, and then fire them with no warning.

No. Sometimes the employee didn't underperform at all. Why do you assume the manager always know the truth?

Management effectively does know the truth, for the trivial reason that they get to decide what the truth is. They are the ones who get to decide what counts as performing and underperforming. It's not as though there is some objective way to determine who is and isn't a desirable employee.

Not sure what you mean "truth". There is a discovery process, before they form their opinions.

Yes, I was mirroring your own use of the word "truth." My point is that performance reviews are simply the result of management's opinions. You asked the question "Why do you assume the manager always know the truth?" and the answer is that truth is irrelevant (or perhaps even nonsense as a concept) in this context. Only opinions matter, specifically the opinions that make up your performance review, which are the opinions of management. There is no objective way to measure your performance or, if there is, management likely is not doing so unless you work in a field with very easily measurable output (billable hours or something like that).

As in many or most aspects of social activities like work, objective reality effectively does not exist. Only the consensus reality matters.

That is not true. Performance evaluation is not totally subjective.

I guess we'll have to agree to disagree then. To me it's obvious that performance reviews aren't and cannot be objective. You may disagree, but this will inevitably lead to dissonance when you your boss's assessment of your performance doesn't line up with what you think your "objective" performance is. This will eventually happen if it hasn't already. If you get a bad review while you think you're knocking it out of the park, the attitude I've outlined here has two benefits. First, it helps you realize that this supposedly objective review of your worth to the company is in fact largely bullshit. Second, it helps you realize that you need to spend some time learning whatever it is that your boss thinks is valuable and optimizing for that instead of whatever you're optimizing for now.

I didn't read OP's comment as "performance issues should be publicized within the workforce" and more "performance issues should be known to the individual employee"

If management thinks you're doing a bad job, it's not needed to make it known to the entire team - but you should know.

I don't think you should always know. I also updated the language.

Doing something about a problem generally requires someone is aware that a problem exists right?

Otherwise it’s just marking them for future termination without telling them, which seems like a waste of everyone’s time.

No. The management team can make honest mistake. After preliminary investigation, they find they are wrong. No need to tell the employee in this regard.

I did not say they should never tell the employee. I think sometimes it's unnecessary.

Shouldn’t that investigation happen before they are considered a performance problem and put on the list?

Giving the employee a chance to rebut any performance problem assumptions would be an important part of this, and would also require they know.

Yes. At some point the employee should know. But there is a process, and I don't think they should inform the employee right from the start.

How much experience do you have managing people?

In my 15+ years doing so, I’ve never heard or seen a situation in a reasonable organization where someone gets on a list like this (intentionally, as compared to their manager screwing up by not having a conversation with them before it is clearly a huge problem to everyone else) without knowing they are going to get on a list like this if they don’t improve.

I have heard it at many places that are flogging employees or using scare tactics to get every cent worth of value they can put or people before they burn out and get thrown on the rubbish bin.

As the employee in that situation I'd want to be told, so I could improve how I manage others' perception of me.