Compound Interest

I was talking to someone recently about our 401K program at Kimray. There is the initial benefit of the Kimray match that doubles your money, but the real magic of an investment account is the compounded interest over time. The simple math is that if a 25-year-old who makes $40K a year puts 5% of their wages in a 401K like Kimray’s, when they retire at 65, they will have over a million dollars in their account. They will have put less than $200K in the account and Kimray will have matched that, but the remaining $600K+ is from compounding interest over those years.

When we think of investing and interest, we most often, and certainly first, think of money. However, there are many ways we invest and most of them are not related to money at all. The word ‘invest’ carries with it a sense of value and commitment, but also involvement and engagement. When we invest in something or someone, we are endowing that person or thing with value and becoming committed to and engaged with it or them.

This is why as a leader, the fifth way you can demonstrate that you care for and value the people you serve is to Invest In What Matters To Them.

When we invest ourselves, our time and our resources in the people around us and the things that are important to them, several things happen:

Investment follows care and denotes interest. Interest leads to conversation, understanding, and engagement. I don’t care about the stock market really. However, if I were to sink a reasonable sum of money into a particular stock, I can predict that my interest in that company and its stock value would increase significantly. To be able to invest in the things that matter to our people, we have to know them. We have to understand where they are in life, what their goals are, and what obstacles they face. This means spending time getting to know each other. Our ability to match resources and attention to their interests also expands our own world and broadens our experience.

People mimic what is modeled around them. As leaders, we bear a significant responsibility to model the behaviors we want to see replicated in the culture of our community. For us to learn about one another and be willing and able to invest in the things that are important to others, we have to trust each other. We have to go first and be vulnerable in order for people to be vulnerable back. The great thing about trust and vulnerability is they increase our sense of belonging and connectedness. Additionally, when people are cared for and invested in, it not only impacts their behavior towards others, it also increases their care for and investment in themselves.

Which leads to the third thing that is impacted by our investment in the things that matter to others: it is a deposit into the bank of their finite reserve capacity. I have written before about finite reserve capacity (FRC). It is the bank of energy a person draws on to withstand stress. If a person or a team is operating at the max of their FRC they have no margin to absorb additional stress. Life has a way of throwing stressful things at us in general, but change is a form of stress too. So the ability of a person or team to be adaptable and flexible is directly related to FRC and by investing in the things that are important to our people we are increasing their resilience.

There are lots of ways we can do this:

  • Policies and procedures that acknowledge and support people in various seasons of life (think maternity leave, support for people with aging parents, child care, education, etc.) 
  • Spending time with people one-on-one in their space (open door policies are great, but ineffective; you must go to them.) 
  • Being active in the life of the community (attend events, acknowledge and celebrate birthdays and other significant life moments.) 
  • Contribution matching or team member directed giving as well as financial and in-kind support for things your team members are passionate about and invested in themselves. Remember, true investment can be money or tangible resources, but it is also and always relational too.

As leaders, we compound our interest in the people we serve by getting to know them and then investing in their lives in meaningful ways. Doing this well increases the connections in our community and improves the resilience and flexibility of our team. However, we cannot be successful in this if we do not have margin in our lives to spend time and resources on others. Caring for others starts with being healthy ourselves and saying no often enough that we can say yes to making deposits in the accounts of those we care about.

Great leaders care about the people they serve in tangible ways. If we make continuous little deposits into this account, we will reap compounded results that far exceed what we put in. We win, the community wins and our people win. Investing in your 401K to utilize the power of compounding interest just makes sense. Investing in the people around us and the things that matter to them makes just as much sense, and the compounded interest is worth far more than money. It is worth the community we all want to share, and it is The Kimray Way.