The word compass as used here does not refer to the magnetic instrument of the mariner (the magnetic compass was apparently not known in the western world until about the twelfth century A.D.), but refers to the Liahona or "director ball" given to Lehi by the Lord to show him the way whither they should travel. (1 Nephi 16:9-10; Alma 37:38.)
George Reynolds has explained the differences between these two "compasses":
In the days of Moses, when he led the children of Israel out of Egypt a pillar of cloud by day and of fire by night moved in front of them. This the Hebrews followed. But to Lehi he gave this Liahona, or compass, as the ball was called and it pointed the way they should travel. It had one strange peculiarity, which was that it worked according to their faith and diligence. When they kept God's law it showed them much more clearly the way they should go than when they were careless or rebellious. Some people have confused this ball, because it is called a compass, with a mariner's compass, that sailors use at sea to direct the course of their ships. But there is a great difference between the two. The Liahona pointed the way that Lehi's company should travel while the needle in the mariner's compass points to the north. The one showed the way Lehi should go, the other informs the traveler which way he is going. The one was especially prepared by the Lord for Lehi and his companions and was used through faith only; the other can be used by all men, whether believers in the true God, pagans or infidels. (A Dictionary of the Book of Mormon [Salt Lake City: Hyrum Parry, 1891], p. 170.)