Pete Deemer has written an article on InfoQ, Manager 2.0: The Role of the Manager in Scrum which disucusses the role of the manager in an Agile organisation.
The situation sketches that he gives are all too familiar, and anyone working on a transition to Scrum (or any other Agile practice) would be well advised to read this article.
The quote that rang the most bells for me was:
“If there exists a fundamental belief in the effectiveness of the “command and control” approach within the management and executive ranks, and a heavy dependence on intimidation, threats, or punishment (such as shaming or humiliation) as a management tool, it is going to be particularly difficult to make the transition to a new way of thinking. As a result, an adoption of Scrum risks being incomplete and dysfunctional, producing little if any improvement for the organization.";
The warning not to have (ex-) managers as Scrum Master is another important lesson, though. The habit of following orders is just so very hard to break.