I hope one day we all can realise that all of the pontification about the defining qualities of a 'senior' engineer, or the height at which the bar should be set, whether the bar has slowly been lowered over time, etc is all pointless. Senior or not senior is a lens useful only to HR and insecure engineers.
When I ran bigger companies in the past, I gravitated towards defining whether someone is entry level, junior, mid level or senior _entirely_ based on experience measured in time. And their salary was a function in which that was the primary factor. The problem with any internal definition of "senior" is that it's misaligned with the market. If you pay someone less than their market value, they're likely to leave for…
That's The Critical question. That is: the situation needs X (read: combo of hard tech skills and soft skills). Can they deliver X and then some?
If not, there's three choices:
1) Develop them to fill their deficiencies, if they're interested.
2) Communicate with them that the biz has evolved and the fit is a misfit. This happens with founders who evolve into CEOs and don't have the chops for that role. It happens.
3) Do nothing.
Note: A seasoned employee will always be asking the same questions. That is: is this the place for me. Should I stay or go?
Great leaders and managers are aware of the mutualness of the relationship and approach it from that pov