Working Wounded Blog: Dark Side of Compounding at Work
The dark side: lessons learned from the Catholic Church and others.
July 19, 2007 — -- We all know the beauty of "compounding" when it comes to our investments. That's where a financial snowball starts as a small ball at the top of the mountain and by the time it gets to the bottom it's a huge juggernaut. At least that's the way it was on "Rocky and Bullwinkle" when I was a kid.
Money multiplies over time, the philosophy at the heart at the heart of "good" compounding. There are two variables that drive this process. How much money you start with and how long you have to let compounding work its magic. Since most of us can't be a Rockefeller or Gates and start with acres of cash, most of us look to time to build our fortune.
This isn't just for MBAs. No, anyone who invests should understand that time helps your cause. Just think back to those IRA commercials a few years back. You remember the ones where we were all going to be zillionaires. Because we'd put a small amount of money away each month -- and French Riviera here we come.
OK, enough about the good of compounding. There is also its dark side — where time allows something bad to cover the entire landscape like the way a dark cloud covers the sun in a science-fiction movie.
Take the Catholic Church's $2 billion in payments for sexual abuse cases (so far). Churches are literally going bankrupt to pay claims of people victimized. I saw a quote earlier this week from someone who was victimized who said that they were going to receive a pile of cash. But that wasn't going to restore what was taken away from them when they were 10 years old.
The Catholic Church is the classic example of bad compounding, where instead of minimizing the damage a bad situation becomes horrific. Instead of nipping the chain of abuse early on, the problem is compounded when the priest is moved from parish to parish and allowed to ruin many more lives.
What does this all have to do with your workplace? Plenty. Because all of us have seen many examples of bad things getting swept under the rug in our organizations. Bullying. Sexual harassment. Abusive bossing. Taunting.
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