In many cultures, sexual orientation has very strict rules or expectations to follow. People in strict cultures, who are against "homosexuals" and what not, will most likely stay straight because they want to feel accepted and not be judged or critisezed or in some cases even harmed because of their different sexual orientation. So basically their sexual orientation depends on the opinions of others in their culture.
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In this situation where a younger supervisor is managing an older, more experienced subordinate I would recommend that the younger supervisor acknowledges the subordinates experience, and is upfront with them about any problems that may arise as this would create a smoother relationship between the two and would allow them to better work together. Specific to the case study, instead of simply firing him/her or giving him a warning I would advise him/her to speak with him/her about what he/she is not doing well, and see if he/she believes if that is something that he can change. If he/she admits that his/her current position is something that he/she can no longer be successful in then it is possible that the company could find another position for him/her, considering that he/she has been an intergral part of the company for many years, and there are people that are loyal to him/her.
Explanation: