US viewpoint
Howdy... just thought I'd throw in a view from up above... at my airline... UAL, it is always the Customer Service Agents who handle upgrades... and they are ONLY given to folks who have the ability, with frequent flier miles, to upgrade. Also, you can only upgrade one class of service. The one loophole, of course, is when we are oversold... then I don't know how they upgrade. Probably by who has the highest miles in thier account... Flight Crew, Cabin Crew and whoever else cannot upgrade. If someone wants to upgrade in flight, we just say... "That will be $3000... which credit card do you want to put it on..."
One nice point with our system is that employees travelling have a better chance of knowing where they stand, in terms of 'will I be getting on', and what class of service will I be sitting in.
Gotta Fly...