I have never once seen a "parliamentary debate" (your #1) like you describe.
I know there are places that use peer 360. I have never heard of places that use it as the sole or even primary factor in promotions. It is *a* factor.
In almost every place I have been at, it works the same way: the person's manager says, "this person is ready for a promotion" and either a position is created for them to have that promotion, or they fill an open position for that job.
It's that simple, and it's pretty reasonable.
I can't say for the companies you have worked at, but the idea that a promotion is determined by a peer 360 (popularity contest) or someone's manager needing to argue with people who don't directly work for that person is absurd. Never in a million years would anyone stay in either of those situations if they had the ability and option to leave.
J.Ja