Seniority

Seniority
Seniority is the concept of a person or group being in charge or in command of another person or group. This control is often granted to the senior person(s) due to experience or length of service in a given position, but it is not uncommon for a senior person(s) to have less experience or length of service than their subordinates.

More generally, "seniority" can be a description of an individual's experience or length of service, and can thus be used to differentiate between individuals of otherwise equivalent status without placing them in a hierarchy of direct authority.

Subordinates are generally expected to follow the actions, orders, or requests of those senior to them with little or no question.
http://en.wikipedia.org/wiki/Seniority

Well, I have nothing against seniority rules and I do agree with the definition above, partly. There are good and bad about seniority rules.

The good.
Generally senior has more experience or work longer than their counterpart, thus placing them higher in hierarchy than those new hires is correct. The new hires will respect their senior and seek their assistance when required; the senior can guide the new hires, thus saving them a lot of time and avoid banging dead-end.

The bad.
Sometime the freshly join person have more experience than the person who has longer service length. It is kind of awkward to become subordinate under someone who is less or equally competent than you.

The ugly.
It discourages changes to the organization. As a junior, he or she is unable to contribute or provide changes to the work environment even though he or she has really good idea. After that, he or she have to work the way up the rank the old method, stay and work longer there.