Multinational corporation navigating crisis

Crisis Management Playbook: How Multinationals Navigate Employment Relations

Theo Raines in Business & Economy August 2025 • 4 min read.

"Uncover the surprising strategies multinational corporations use to handle employment relations during times of crisis, defying legal constraints and market pressures."

The global economic crisis of 2008-2009 tested the resilience of multinational corporations (MNCs) like never before. As financial markets teetered and economies contracted, these organizations faced unprecedented pressure to adapt and survive. A key battleground in this struggle was employment relations – the intricate web of policies, practices, and negotiations that govern the relationship between employers and employees.

Conventional wisdom suggests that MNCs must adhere to the legal and institutional frameworks of the countries in which they operate. However, a groundbreaking study of General Motors (GM) during the crisis reveals a more nuanced reality. The research uncovers how GM, facing near-collapse and government bailout, implemented sweeping changes to its global workforce, often defying local laws and established norms.

This article dives deep into the political and economic forces that shape employment relations in MNCs during crises. By examining GM's actions in its Australian subsidiary, GM Holden Limited, we'll uncover the surprising ways in which companies navigate conflicting pressures, exercise power, and ultimately reshape the landscape of global business.

Defying Expectations: When Legal Constraints Don't Dictate Outcomes

Multinational corporation navigating crisis

The study challenges the widely held belief that host country legal institutions act as an absolute barrier to the transfer of employment practices within MNCs. In the case of GM Holden, directives from US headquarters to cut pay, freeze wages, and reduce workforce numbers were met with varying degrees of resistance and adaptation, regardless of local labor laws.

Here are some key examples:

Pay Cuts for Senior Management: Despite Australian employment law preventing unilateral pay cuts, Holden successfully negotiated agreements with all senior managers and executives to reduce their salaries.
Pay Freeze for Salaried Workers: Even with a collective bargaining agreement guaranteeing annual pay increases, unionized engineers at Holden voted to accept a pay freeze, demonstrating a willingness to sacrifice individual gains for the company's survival.
Workforce Reductions: While US headquarters pushed for significant layoffs, Holden management resisted, negotiating a smaller number of redundancies and delaying implementation to protect key capabilities.

These examples highlight that legal constraints are not the only factor shaping employment relations in MNCs during crises. Other forces, such as market pressures, power dynamics, and political considerations, play a crucial role in determining outcomes.

Playing the Game: Navigating Complexity in a Globalized World

The experiences of GM Holden during the 2008-2009 crisis offer valuable lessons for MNCs operating in an increasingly interconnected and volatile world. To thrive in this environment, companies must recognize that employment relations are not simply a matter of compliance with local laws. Instead, they are complex political transactions shaped by a multitude of factors.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1177/0143831x17748198, Alternate LINK

Title: The Politics Of Employment Relations In A Multinational Corporation During Crisis

Subject: Management of Technology and Innovation

Journal: Economic and Industrial Democracy

Publisher: SAGE Publications

Authors: Stephen Clibborn

Published: 2018-03-07

Everything You Need To Know

What were the main challenges faced by multinational corporations during the 2008-2009 global economic crisis?

During the 2008-2009 global economic crisis, multinational corporations (MNCs) such as General Motors (GM) faced immense pressure to adapt and survive due to financial market instability and economic contraction. A primary challenge was navigating employment relations, the complex system governing the relationship between employers and employees. These challenges included the need to make sweeping changes to the global workforce, often in defiance of local laws and established norms to maintain financial stability.

How did General Motors (GM) navigate employment relations in its Australian subsidiary, GM Holden Limited, during the crisis?

GM Holden Limited, the Australian subsidiary of General Motors, demonstrated a nuanced approach to employment relations during the crisis. While the US headquarters pushed for cost-cutting measures, GM Holden negotiated with local stakeholders. Despite Australian laws preventing unilateral pay cuts, GM Holden successfully negotiated salary reductions with senior management. Unionized engineers, bound by collective bargaining agreements, voted to accept a pay freeze. Though workforce reductions were mandated from the US, GM Holden reduced the number of redundancies and delayed the implementation, showcasing an effort to balance global directives with local considerations.

Did the legal and institutional frameworks of the countries in which GM Holden Limited operated fully dictate the outcomes of its employment practices?

No, the legal and institutional frameworks of the countries in which GM Holden Limited operated did not fully dictate the outcomes. The study challenges the notion that host country legal institutions act as an absolute barrier to the transfer of employment practices within MNCs. While GM Holden had to consider local laws, market pressures, internal power dynamics, and political considerations also played crucial roles. For example, pay cuts, pay freezes and workforce reductions were implemented through negotiations and adaptation, rather than pure compliance. This underscores the complexity of employment relations in MNCs during times of crisis, where multiple factors influence decisions.

What specific examples illustrate how GM Holden Limited adapted to the crisis, challenging conventional expectations regarding employment relations?

GM Holden Limited provided several specific examples that highlight its ability to adapt. First, despite Australian employment law preventing unilateral pay cuts, Holden negotiated agreements with senior managers and executives for salary reductions. Second, despite a collective bargaining agreement guaranteeing annual pay increases, unionized engineers agreed to a pay freeze. Third, while US headquarters pushed for significant layoffs, Holden negotiated a smaller number of redundancies and delayed implementation. These actions demonstrate a willingness to balance global headquarters directives with local legal and economic factors.

What lessons can be learned from the experiences of GM Holden Limited for multinational corporations operating in a globalized world facing a crisis?

The experience of GM Holden Limited offers several critical lessons. Multinational corporations must recognize that employment relations are not simply about complying with local laws. Instead, these are complex political transactions shaped by multiple factors, including market pressures, power dynamics, and political considerations. MNCs must be prepared to negotiate, adapt, and balance global objectives with local realities. The ability to effectively manage employment relations during crises requires a strategic approach that considers the interplay of all these factors to maintain both financial viability and positive relationships with the workforce.