Also, if one of the individual engineers on the team has a desire to try management, took the training courses, has the support of the team, and believes he'll get a shot next time a manager is needed... and then you announce "Well, we couldn't find anyone internal for the job, so meet your new manager: the stranger we hired externally!" I guarantee that engineer will become instantly demoralized, checked out, and will likely quit soon. Source: My experience in my last three jobs.