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@rithvikp in my experience, they wouldn't. Everyone would continue on their work and still try to please the manager. Occasional small lies are a minor thing given the workload in the team
It's weird that I feel okay with team leads or managers who I know are lying about facts, just to motivate the team in some way. I mean I might lose respect to that person but I would somehow commend their people skills. A pat in the back goes a long way
rant