Can You Manage?

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."