There is an interesting discussion in my linkedin group. The topic is: when you hire a scrum master, do you look for technical skills and leadership skills? Would team members respect a scrum master who is not a good subject matter expert or who is technically challenged? (in case of a software scrum team)
I have seen so many team members who write great code and develop great applications, but fail in scrum master role when they choose to try it out. Similarly, I've see several effective managers totally failing this role because they did not have control over the team any more. So - while I prefer both - I vote for personal skills, leadership, honesty, desire to help, respect, unselfishness. In terms of hiring, there are situational questions that I find most efficient. Here are some examples:
1. An executive walks into your team's retrospective because he wants to know how things are going. Do you ask him out, and how? 2. At a demo, a business stakeholder not directly involved with your product, starts making suggestions like "why don't you change a label of that button" and "I do not like the color of this screen", and does this for each feature your team demo's. The team members look demoralized. How do you protect your team? 3. You are a scrum master for a new team that has no prior scrum experience. At a standup, two team members engage in a 5-minute long conversation on a specific topic. Do you interrupt them at the standup, right after, or wait until the retro? 4. At a retro, your team members do not speak up, while you know that there are communication issues on the team. How do you make them talk? 5. The team committed to 5 stories for this sprint at a sprint planning, but you know for sure they won't be able to complete all of them. How do you tell them about it so that they don't overcommit, and do you have to?
There are more complex questions on managing cross-team dependencies, dealing with the business requests to deliver the product by a specific timeline, getting buy-in from the management, dealing with fractional assignments, etc.