You can only do it with the highest ranks of sailor and Petty Officer (Matrosenhauptgefreiter and Stabsoberbootsman). In game, open the crew management screen and select awards, promotions, then select the guy you want to promote and drag a promotion onto him, just like you would any promotion, but you must have a spare space for him to be promoted into, or it will refuse it. Like I said, I do it when crew get transferred out via the realistic crew transfers in SH3Commander and most of the crew I enlist are new guys with no experience, chucked into the engine room with everybody else moving up to maintain a fair rotation, nobody jumps the promotion queue on my boat.
