I lead Engineering team is it bad to be nice?

Something that worked for me:

1. Try to get on feedback calls with them and understand why this is happening.
2. Help them with necessary resources if that's something you can do.
3. If they underperform consistently, be clear about having to let them go if they don't improve.
4. Let them go if things still don't improve.

First priority is to do your job well. If your nicety is making your work (and your managerial leverage is that your work is the sum of your team’s work), there’s no need to be nice.
Read about Radical Candor and One minute manager.

1. Set expectations clearly.
2. Give positive feedback as soon as you see something done well.
3. Share what was not done as per expectations as a regular process.

If you follow this, you won’t need to worry about being nice or not.