Your understanding does not appear to be based on full facts. In government services, there is a concept of selection grade after which merit counts significantly. In armed forces, there is also a dictum- shape up or ship out. If people are not good enough, they are retired early. Armed forces have a very vigorous system of recognizing merit. Even where merit is main criterion, there is a concept of zone of consideration. For example, you will come across ads saying that the candidate should have, say 10 years of relevant experience. Why?
The best system may be a mix, depending upon organization requirements
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