PSYCHOLOGICAL CONTRACT AND EMPLOYEE PERFORMANCE: EMPIRICAL EVIDENCE FROM DEPOSIT MONEY BANKS IN RIVERS STATE, NIGERIA

Abstract

This study investigates the relationship between psychological contract dimensions—relational and transactional—and employee performance within Deposit Money Banks (DMBs) in Rivers State, Nigeria. The total target population comprised 258 employees, and the sample size of 181 was determined using Taro Yamane’s formula, with a 5% margin of error and a 95% confidence level. Among the 181 questionnaires that were administered, 160 (88.40%) were valid for analysis. Data were collected from these 160 respondents, who were selected through stratified random sampling across operations, marketing, and customer service departments in 21 Central Bank of Nigeria (CBN)-registered DMBs. A structured, self-administered questionnaire using a 5-point Likert scale was employed to assess constructs related to psychological contract and employee performance. The data were analysed using Pearson Product Moment Correlation (PPMC) at a 0.05 significance level via the Statistical Product and Service Solutions (SPSS) version 23.0. Results revealed a very strong positive correlation between relational contracts and employee performance (r = 0.9494, p < 0.00001), as well as a strong, significant correlation between transactional contracts and performance (r = 0.9115, p < 0.00001). These findings demonstrate that both dimensions of the psychological contract significantly enhance employee performance—relational contracts through sustained engagement and transactional contracts through short-term motivation. The study recommends incorporating psychological contract principles into human resource management practices to improve employee commitment and drive organisational performance in Nigeria’s banking sector.