HR issues in project management - when not to let go of an employee

If a popular employee or a intelligent person in the group is to let go, the effect seems to be that credibility of management goes down bcos it gives out the sign that management did not want to hear such a person.

Considering the psychological effects of letting go of a person or, in general, of any decision is very crucial to the success of the decision.

People see trends in everyday occurences.