Employees at the Jackson Hole Corporation typically take forty-five minutes for lunch when the allocated time is only thirty minutes. Employees are encouraged to eat at the company cafeteria located in the middle of the company facilities. Most employees choose to eat their lunch in the cafeteria. Is there an agency cost here? If so, how can management eliminate or reduce this agency cost? How might management eliminate this agency cost? (Select all that apply.)

A. In order to eliminate this agency cost it may be necessary to significantly modify the cafeteria or the serving procedure. If the management wants to maintain the thirty minute lunch period it may have to look into the serving procedure in their cafeteria to see how to shorten lines and speed up purchasing meals. Any cost to redesign the cafeteria process is an agency cost. Any additional employees added to the cafeteria staff to speed up the process is an agency cost.

B. The company could extend the lunch period to 45 minutes to accommodate the workers and then extend the workday by fifteen minutes to recapture the lost time. However, the cost to negotiate a new work day schedule is an agency cost. Any turnover caused by the new workday is also an agency cost.

C. If the facilities are sufficient to handle a thirty minute lunch the solution may be as simple as reaffirming the lunch break time with the employees

D. It may be more costly to enforce the thirty minute lunch time than to accept the standard forty-five minute break currently used by employees. Not all agency costs can be eliminated or reduced. The norms of the employees and the ability of current facilities to support a policy need to be considered when setting policies, in this case the length of the lunch break, in the first place.