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The paper aims to investigate the role of the rater, a key player in the performance appraisal system (PAS), in determining the ratee’s self-efficacy. In this regard, the current study highlights the role of rater’s knowledge and experience in conducting just appraisals by making the performance appraisal processes and distribution of resources fairer. The study investigated different components of the PAS under the lens of systems theory and the upper echelon theory. The study used survey methods to collect data with the help of self-administered questionnaires from raters and ratees (252 in total) working in different organizations operating in various sectors of the economy. The collected data were analyzed using SmartPLS-4. The results revealed that the rater’s knowledge about the PAS do not predict the ratee’s self-efficacy. Nevertheless, the rater’s knowledge significantly predicted the ratee’s self-efficacy through procedural and distributive justice. Also, the rater’s experience in conducting the performance appraisal conditionally predicted the indirect relationship between the rater’s knowledge and self-efficacy through procedural and distributive justice. The study provides invaluable insights for the users of performance appraisals and policymakers by highlighting the importance of the rater’s knowledge alongside the rater’s experience in shaping positive ratee reactions.