meritocratic system
A system in which advancement, rewards, or selection are based on ability or merit rather than on seniority, connections, or other factors.
This company introduced a meritocratic system so that even young employees can be promoted.
年功序列 is a seniority-based system, often contrasted with 能力主義制度, which emphasizes ability over age or length of service.
Compound of 能力 (ability) + 主義 (principle, doctrine) + 制度 (system). The exact historical derivation is uncertain, but the term is a straightforward modern compound.