Working Wounded Blog: Dark Side of Compounding at Work

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.

We all need to remember that bad compounding can be stopped. Multimillion-dollar jury verdicts against organizations almost always have a point early on where the problem can be resolved. But no one chose to stand up and say, "No!"

But we often don't nip things in the bud. Because we are busy. Because someone else will take care of it. Because that's why we have HR. Because our hearts didn't go out to the victims enough. And finally, because we weren't the ones receiving the abuse.

The workplace needs people in the corner office who are committed to creating a safe and healthy workplace. Who actively look for the canaries who can tell us that there is trouble in the coal mine.

The Catholic Church is paying the sins of bad compounding, hopefully you'll learn from its lesson.

Quote of the Week

"If you tell the truth, you don't have to remember anything." -- Mark Twain

Book Excerpt of the Week

"Stick Your Neck Out" by John Graham (Berrett Koehler, 2005)

"Every action and every attitude can make a difference. When we realize this, and act on it, we can change relationships, organizations, communities — and beyond. In taking responsibility in this deeper way, we become not just agents of change but role models — people who can move others, including our leaders, to act responsibly too."

Bob Rosner is a best-selling author, an internationally syndicated columnist, popular speaker and a recent addition to the community of bloggers. He welcomes your comments at bob@workingwounded.com.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.