The following Powershell script compresses all the .BAK files using winrar.

   1: cd D:\MSSQL\MSSQL.1\MSSQL\Backup
   2: $dirs = get-childitem|where{$_.PSIsContainer}
   3: foreach ($dir in $dirs) {
   4:     cd $dir
   5:     $files = get-childitem *.bak
   6:     foreach ($file in $files) {
   7:         #Check for null
   8:         if ($file -ne $NULL){
   9:             #write-host $file.Name.Replace(".bak", "")
  10:             & "c:\program files\winrar\rar" a $file.Name.Replace(".bak", "") $file.Name
  11:             remove-item $file
  12:         }
  13:     }
  14:     cd ..
  15: }

Walk through:

1. Change directory to the backup root directory
2. Get all the subdirectories and iterates through each one
3. Get all *.BAK files and iterate through them
4. Use the winrar command line to compress the file
5. remove the .BAK file

Happy Powershelling!