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I agree, there would have to be measures in place to prevent the “promote to the level of incompetence” style of meritocracy that is prevalent already. There needs to be a system of recognizing that the person in any given position has the skills and abilities that make them awesome at that specific job, and rewarding them appropriately without requiring them to justify it by taking on tasks that they’re not suited for.
The idea that workers should always be gunning for a promotion is one of the worst parts of what people think a meritocracy is. But how else do you determine how much they should be paid?
Elon has gone on record saying he’s a huge sci-fi fan, and has mentioned Iain M Banks in particular who writes a lot of posthuman and transhuman characters. He’s literally pulling his ideas directly from fiction.