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I feel it's a mix. Being close to the right people can help. Having employees that already know the value of your work & ethics is extremely helpful, especially when they are in or associated with the promotion position.
However I can't say that I have seen others I felt were unworthy of promotion just because they were in an inner social bubble. I do go to work luncheons, Christmas parties & such but I don't go out for drinks or anything like that.
I feel my promotions have been merited. However, in most of those circumstances my assigned work duties and projects have put me in a place to have frequent contact & create friendly working relationships with those that later on promoted me.
That depends a lot on the workplace. There are places where meritocracy is very important, and others depend on connections. Where I work depends a lot on the friendships you have.
It's a combination, and depends a lot on the company and management. I have seen a lot of amazing people passed over in favor of someone far less suited.
I tend to think that promotions are more often merit-based... the higher-ups need to have some justification for advancing one person's career instead of another's. Getting the job in the first place seems to be more based on who you know. Name dropping is one of the easiest ways to break the ice during an interview by establishing some common ground.
In my experience, it really depends on the workplace. I've seen promotions that have been earned based on merit, but in some cases, it seems to be more of a reward for staying close with the right people rather than actual performance.
The key is to have objective criteria when making any decisions about career advancement and rewards.
To earn a promotion, I've found that it's important to have a good track record, be well-respected among your colleagues, and develop relationships with those in higher positions. It's not enough to be talented or have the right contacts; you need both to maximize your chances of getting promoted.
It's always who you know...with ANYTHING. I mean sure, sometimes performance is undeniable, but your bosses' buddy isn't going to be bottom of the chain I'll tell you that.