The player can have different levels of command experience. This can be increased by story points. If you don't know what story points are, read Alex's blog post.
[Ship class] - [Officer Rank] - [Player Faction Name]/[Example: Tri-Tachyon Name]
Frigate - Junior Officer - Lieutenant / Security Officer
Destroyer - Senior Officer - Captain / Senior Security Officer
Cruiser - Junior Commander - Major / Security Supervisor
Capital - Senior Commander - Admiral / Executive
Officers have a skill called Ship Command. Each time an Officer levels up, the player can choose to increase the ship class that an Officer can command without penalty.
If an officer does not have the experience to command a ship, then the ship will suffer combat readiness penalties. The math is -5% max CR penalty times the difference in rank for the ship class standard for the officer.
On the other hand, if an officer has more than ample experience, then the ship will gain combat readiness bonuses. The math is +5% max CR bonus times the difference in rank for the ship class standard for the officer.
If the player has too many officers, then the fleet as a whole will suffer combat readiness penalties. This is determined by the player's commanding skill from level 1 to level X.
Each level increase in Commanding Level increases the amount of officers by 1. The player at level 1 starts with 1 available officer, meaning at level 10, the player can have 10 officers without penalty.
The player can appoint more officers than the commanding level, but will suffer combat readiness penalties. For each officer exceeding the penalty, the fleet will suffer -5% max CR limit.
I may expand on this post in the future but I'd like to hear people's opinion on what I have so far.