There are many theories of leadership which can help make a transition smoother. Contingency theory and situational theory are two such theories which states that no one leadership style can suit all situations but there is some difference between these two theories. Leaders need to understand that they will not be facing the same kind of situations each day and hence they must be willing to adopt a flexible style that can be altered according to the situation at hand. This is quite similar to situational theory of leadership with one major difference. Contingency theory maintains that some times a leader who appears very effective and successful in one situation may not find himself all that effective in a different situation simply because leadership is contingent upon some factors. Situational leadership on the other hand states that leaders can adopt certain behavior and traits for variety of situations and alter their style accordingly. A person who subscribes to situational leadership theory might find himself becoming more effective if he adopts different attitude and behavior depending on a new situation. Someone who depends on contingency theory will however be able to accept that he may not be successful and effective in all situations (Blanchard, 1999). But while contingency theory points out an important problem, it is situational theory of leadership which is far more effective in...

It all depends on how effectively and smoothly a person can move from one position to another. Internal promotions have their downsides and so do outsiders taking over key positions. By the same token, internal promotion has many positives to it as well. For example a person who is promoted internally understands the organizational culture very well. He knows the needs of his employees, the problems that exist in the organization, and the targets that the firm seeks to reach. An outsider may not be aware of all this and can make serious errors or may find adjustment process very difficult. But with internal promotion, the one risk is breakdown of communication. While communication should actually become better as internal promotion occurs, there can be a risk of resentment and hostility which may lead to breakdown. This can however be conquered with good leadership training and better communication skills. With an outsider such a breakdown is not feared but there are several other risks which far outweigh the benefits associated with introducing an outsider to the firm.
REFERENCES

Ken Blanchard, Patricia Zigarmi, and Drea Zigarmi Leadership and the One Minute Manager: Increasing Effectiveness Through Situational Leadership (1999)