でも、それで士気が下がっては本末転倒ではないかと。

、。

But if morale drops because of that, wouldn't that be putting the cart before the horse?

Literal

But, that [by-で] morale [subject-が] drop-[conditional-ては] putting-cart-before-horse [copula-ではないか][quotative-と].

士気 'morale' — a formal word often used in military or business contexts. 本末転倒 is a four-character idiom meaning 'putting the cart before the horse / confusing means and ends' — 本末 'root and branch' + 転倒 'inversion.' ~ては…ではないかと trails off with a cautious objection.