I Learned the Hard Way That Startup High Executives Profit While Employees Struggle

If you work at a startup, here’s something you need to know.

The pay gap between executives and employees isn’t just real—it’s massive. And most people don’t realize how bad it is until they’re the ones struggling to make ends meet while leadership cashes in.

I learned this lesson the hard way.

The promise vs. The reality

In January 2022, I began what I believed was my dream job as a Talent Services Officer at a well-funded startup in the forestry industry.

The company’s mission to help local farmers plant and sell trees while reinvesting profits into the community was inspiring.

The clear organizational structure also attracted top-tier talent, which made it an exciting place to be.

My role focused on employee engagement and onboarding new hires, and everything seemed to be going smoothly—until employees began raising the same concern:.

Why were executives earning substantial salaries while frontline workers struggled?

Initially, I dismissed the issue, assuming that salaries were competitive and market-aligned.

However, as morale and productivity started to decline, I felt compelled to investigate further.

To gather honest feedback, I sent out an anonymous employee satisfaction survey.

The results were eye-opening and confirmed my growing concerns: the pay disparity was far more significant than I had anticipated.

It became clear that addressing this issue was not just important for the wellbeing of the employees but also for the long-term success of the company.

The wake-up call

When I presented my findings to my manager, she didn’t dispute them.

The executives were earning significantly more than the employees who were keeping the company afloat.

Despite this, the company remained financially stable.

However, everything changed in 2023.

The economy took a downturn, investors withdrew their support, and by November, the company shut down, leaving every employee—including myself—laid off.

Before the closure, I was assigned the responsibility of managing redundancy payments.

That’s when I saw the final payout figures.

The executives received lavish golden parachutes, while the employees were left with mere scraps.

It became painfully clear why morale had been so low.

The disparity was staggering, and it was no surprise that the employees had been struggling.

The startup pay problem and what CEOs must fix

This issue isn’t unique to my experience—it’s a systemic problem in the startup world.

Many CEOs and executives defend their exorbitant salaries while their employees struggle financially.

A deep dive by Hackernoon reveals how leadership compensation often comes at the cost of the workforce, exposing the hidden inequities within startup culture.

Pay disparities don’t just impact bank accounts—they create toxic workplace environments where employees feel undervalued and overburdened.

This imbalance is a major driver of dissatisfaction, burnout, and ultimately, high turnover. When leadership prioritizes their own earnings over fair pay structures, it fosters resentment and weakens company culture.

Poor compensation strategies and questionable leadership decisions often breed hostility, leaving employees feeling powerless and disengaged.

In contrast, research from McKinsey highlights that companies investing in equitable pay see higher employee engagement, increased productivity, and stronger financial performance. When people feel valued, they work harder, stay longer, and contribute more to long-term success.

Fair pay isn’t just an ethical decision—it’s a strategic one. Startups that recognize this will build healthier workplaces, attract top talent, and drive sustainable growth.

My advice to startup CEOs

As a startup CEO, ensure salaries align with market rates and employee experience.

Compensation isn’t just about numbers—it reflects respect, drives retention, and boosts performance.

Take inspiration from leaders like Thumbtack’s CEO, who prioritize employee trust, strengthening company culture and business outcomes.

And if you’re an employee?

Stay informed about your company’s financial structure.

Ask questions.

Demand transparency.

A company that neglects its people is setting itself up for failure.

What’s your take?

Have you noticed salary gaps in startups?

Share your thoughts in the comments!