It's about the money. The message is because you have a coordinator or position coach making more money than the hierarchy allows . HC is the highest paid , then coordinators and position coaches . If that's off you'll get that message. Hitting that button will take your available cap for coaches and redistribute the money so that hierarchy fits but it will use up most if not all of the money.
I never do anything cause of the ambiguous nature of the whole process . Hire fire and poaching . Not that coaches don't matter, but I will get poached and I will just let the AI fill the position . That keeps the salary the lowest but still allows you to make the financial moves if you wanted to poach a coach yourself....or promote from within .
You just really have to imagine the numbers , shoot offers and hope for the best . Somebody probably has a grip on this area of the game , as I am pretty sure I dont, but I would have done what you did.....just lower the new hires contract to the level the prior guy was making. Not the guy your fired last spin the guy before him....before you got that message