When organizations plans management by exception move, they use different tactics and strategic objectives. It mainly focuses on the key areas of a business operations which makes it easier for the managers to direct the employees. It is important to keep in mind that it is actually management by exception and it cannot be used everytime or else no unnoticeable problem would be fixed which may create a bigger problem.

In my opinion, at a certain extent, yes, employees may grow lax when they would realize that they don't have to perform everytime as per the standards and can also perform below that too. Employees who are generally good and hard working with high morale, would always aim to provide good result above the standards to the organization despite of their relaxation in their performance where they have the choice to perform below the standards. However, on the other hand, lazy and low morale employees who have no interest to contribute to the organization will mostly perform below the standards when they would realize that management would not take any corrective action unless their performance level is too low. And due to this, they may start to deteriorate their level of performance by taking the advantage of the practice.