The move is a surprising one given Butler's longevity with the team and in the league and the respect he's earned in NFL circles. The Browns made some confirmed cuts on the business side of their operations earlier in the offseason but have not laid off employees or cut wages due to the NFL lockout.
In his role as director of player development he oversaw programs for the team's rookie class, set up educational opportunities for the players year-round and worked with the players on a daily basis in a variety of on and off-field matters. The role of player development director has become more important with many franchises in recent years given the NFL's emphasis on off-field conduct and more recently in preparing players for the lockout.
I really don't know why the firing would take place unless it was a cost-cutting measure.