Horrible idea - not enough is known such as:
1) How is "merit" defined
2) Who determines "merit"

Anything goals that a flight crew could have other than the safe completion of a flight (like performing in a way to accomplish "merit", however defined) is counter productive. Also - depending upon how "merit" is defined, how many people in the HR dept are going to be required for this measurement? Too many questions, bad idea. The seniority system is set up to completely eliminate the A$$ kissing to get ahead found in corporations not involved with flying. Mostly, in the corporate world, it works - the weak sisters do not advance. It does not ALWAYS work though, and some percentage of A-kissers and relatives, etc will advance not on merit, but on external factors. This would be unexceptable - seniority and ability to upgrade and pass check rides should be the rule. I am not against canning someone who fails to upgrade though. When my Grandpa flew for TWA everyone took a Captain checkride after 5 years (this is in the 50's). If you busted it, you were gone. That didn't mean you could hold Captain at that point, but it did weed out those who wouldn't be able to upgrade.