I think the general sentiment among most workers is that promotion by merit is preferable over the stodgy old method of seniority. The other day I was speaking with my manager, and he said that as the company promoted according to performance, the day could come when my position was higher than his. While that is a nice thing to hear, personally I think that a complete disregard for seniority has its drawbacks as well.
It's easier to see the cons of a seniority-based method - the talented young languish in lower positions, unable to make full use of their talent, while hidebound and uninspired older people control the company. Another point oft-raised is that if one's performance has no bearing on the speed of one's career advancement, there would be no incentive to excel. Both of these points are very true.
On the other hand, a strictly merit-based method has its failings as well, although they are not as obvious on first sight. The first among them would be that senior people would tend to be more reluctant to hand on knowledge to their juniors, for fear that they be replaced easily. The second is that if disregard for performance leads to a lack of drive, then on the flip side looking only at performance can lead to a lack of teamwork, as the entire workplace devolves into a cutthroat environment.
Clearly, neither of these two extremes are ideal for an organization to excel. Personally I feel that if promotion by merit encourages excellence and drive, then promotion by seniority encourages loyalty and teamwork. We need both these elements for a company to thrive, therefore the ideal promotion system would be a mix of the two.
