Can You Manage? Should the office hotshot be your next manager? Only if he or she really has the right stuff.

Erika Mangrum was a year into her business and was feelingpressured to promote a star employee to general manager. "Shewanted more responsibility and more pay," says Mangrum,co-founder and president of Iatria Day Spa and Health Center, a 40-employeecompany in Raleigh, North Carolina. Mangrum felt a deep sense ofloyalty to this employee, who had been with the company from thestart, so she went ahead with the promotion. However, it wasn'tlong before Mangrum realized she was promoting doom and gloom.

The new manager's rudeness under stress and her inability tomanage conflict created big problems as the company grew. Mangrum,36, started getting complaints from customers and sensed growingtension in employees. "You could just feel it," Mangrumsays. She offered training, but it was too late. The manager left14 months after being promoted. And that wasn't the end of it.Mangrum, who co-founded the company with her husband, Dave, 47,also lost key employees in the turmoil. "We didn't knowwhat a major impact [a promotion] could have," she says."It's one of the biggest mistakes we'vemade."

She's not alone. Many entrepreneurs feel pressured topromote a star employee into management, even if this person was"behind the door" when soft skills--the ability tonegotiate, influence, listen and mediate--were handed out. Theproblem is, these are precisely the skills needed to be successfulin management. New managers "can get into a place where theirraw talent can't compensate for their inability to work therelationships," says Kerry A. Bunker of the Center for CreativeLeadership (CCL) in Greensboro, North Carolina. In fact,CCL's research estimates that one-third of those who reach theupper levels of companies fail within two years because theycan't build teams, communicate effectively, or keep their coolin tough situations.