Yes, this. I'd add that you end up losing a probably (as he/she's been promoted) skilled engineer as well. Promotion via management is what forces people who might not have the "people-skills" to accept management jobs because they want to be valued.
This reminds me of an article from Rands in Repose:
As I wrote about in Being Geek, the Curse of the Silicon Valley is that great engineers are often promoted to leadership for their hard work. While many succeed in this role, an equal part fails because the skills required to lead are vastly different than the ones required to be an engineer. The Curse is that we’re often placing our most valuable engineers in a role where they’re predisposed to fail.
Think of it like this: there’s a large population of immensely talented engineers that should not be leaders. There is no amount of training that would make up for the talent we’d extinguish by teaching them how to write annual reviews.
But everyone wants to grow.
Unfortunately, in many companies the only perceived growth path is via management.
This reminds me of an article from Rands in Repose:
http://randsinrepose.com/archives/dna/I also believe that management should be about facilitating your team's work, rather than endorsing your team's responsibility.