When one of the values that underpins and guides your team is honesty then that enables everyone to deal with the issues as they really are. If someones work is exemplary they should be told so. If someones work is crap then they need to be told that too.
Honesty as a value does not give free licence to pick on people or to be destructive. What it does do is allow everyone to say their piece, deal with the issue and move on.
I recommend the Toastmasters method of giving feedback -