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I've been having problems with my report for some time now. The problems can be summarized, bluntly, as incompetence. He delivers work that doesn't meet any standards and which I need hours to correct. The expectations towards my team are huge and it's simply not possible to deal with the workload we are expected to deal with if 20% of the team is lacking skills unless the others work many hours more than they are paid for, which we have been doing for weeks now.

I've been coaching him but this has had no effects so far.

After talking to him several times, I raised the issue to my boss. My boss likes my report a lot. My boss asked me whether he can talk to my subordinate and of course, I said "yes".

After talking to him he told me I was being too critical towards my report, that my report feels misunderstood, feels I simply don't like him, that he feels his contributions are not recognized. He said, summarizing a bit, that my role is to be nice to people, not criticize them.

Please note that my boss can't know how horrible the coworker's work is since he has always seen it corrected by me.

How can I deal with that?

This question is related, but you not only have a worker problem, you have a boss problem.

my role is to be nice to people, not criticize them

I think you need to go back to your boss, with some uncorrected work. Ask him to clarify if your role is to be nice to your worker, or to get decent work from your worker. And don't indicate that you want to be mean, that you aren't nice, but that being nice isn't what you think he hired you to be.

Hey Boss - I'd like to clarify our discussion about JimBob. I have been trying to work with him, to get him to do adequate work, work that I don't have to spend hours correcting. Apparently, he interprets that as being mean, and is complaining to you about how unkind I am.

I would like to show you some of his uncorrected work, and then can you give me some guidelines on how you would like me to approach this issue? Would you like me to let the work go out as he produces it? Continue spending X hours a day fixing it, and quit working on Y so I have time? Or is there a way we can work with him to get the data produced with adequate quality?

I can no longer work extra hours doing his job and mine as well. So I need your guidance on how to change this, not to be mean, but just so I don't burn out trying to hold us both up.

As long as you are keeping the pain away from your boss, it works for him. You do extra work, and JimBob quits complaining to him, and he's happy. But that's not sustainable for you, so pass the pain along. Let the boss see the consequences of you not doing your job, but instead just being nice.

Also, the rest of your team should quit correcting his work. All that will do is make them look for work elsewhere, where they don't have do do their work and someone else's, someone who can't be bothered to do it themself. Let your team know that they are not to help cover up the problems with this co-worker, before you start losing your good employees.

Several points...

For starters, start doing 1:1s with that direct if you aren't doing so already. Half hour ever week, with him going first. Start by getting to know each other. This builds trust. If it sounds like schmoozing, you are right, at least initially. But just do it. Eventually one or both of you will run out of personal topics to discuss, and start bringing up what he's working on and the difficulties he's facing. (Keep schmoozing a bit even after that.)

Next, start giving a lot more feedback if you aren't doing so already: "Can I give you feedback? [Wait for a yes; don't give any if not.] When you [behavior] then [consequence]. Keep it up! || Can you try something different next time?" Avoid making it personal. Stick to the behavior and the consequence. Give feedback at least once per week -- and ideally a lot more often. The negative and the positive feedback -- stick and carrot.

Document the feedback you give on a spreadsheet. Do so every single time. You'll want this to prepare and deliver your yearly performance reviews anyway, so having it on paper ahead of time will save you time down the road.

And then coaching. Discuss an improvement goal with your direct, and a few milestones with deadlines. Document the goal, the milestones and the deadlines, and what progress (good or bad) got made by each one. Adapt as needed as your direct moves towards those goals. And rinse and repeat with other improvement goals.

In the best case scenario, your direct will actually improve. Which is great.

In the worse case scenario, your direct does not improve at all, and you'll have a whole file of documented bad feedback that saw no improvements, unmet improvement goals, and whatever else you've tracked. However much your boss likes the direct, there's a point at which documentation just speaks for itself.

So document.