Both in official and unofficial ways. Officially, PERs - annual evaluations written by a superior and reviewed by his superior - are compiled and the scores for the past 3 years considered.
Unofficially, the "who you know and who knows of you" matters as well - the Armoured and Infantry Corps have a Regimental system and the other Branches are small enough to be considered as the same. This "canalizes" progression within Regiments (for instance, promotions and appointments in the Infantry are generally - I say this with a caveat - split equally between the 3 Regiments) In these Regiments, Colonels and their Regimental Sergeants Major have considerable say in who goes where and most are likely to personally know of a subordinates performance and personality to some degree.
It's even more pronounced in the Armoured Corps, where soldiers entire careers revolve around a single battalion Regiment.
A system with its strengths and drawbacks to say the least - a lesson in social dynamics for any observer.
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