As the economy improves and growth moves to the top of corporate agendas, companies are looking closely at how well incentives for their employees and executives align with organizational goals. Best practices suggest that alignment requires collaboration between finance and human resources. A recent Towers Watson survey of 340 senior executives in finance and HR examined how well companies are fostering collaboration between the functions—and how well they're achieving the alignment that collaboration can engender.

The survey revealed that HR and finance teams in about four in ten organizations work together on setting strategy for reward programs, and the same proportion collaborate on determining changes to reward programs—despite the fact that only about two in ten HR managers think their function works with finance to set overall workforce strategy. Finance managers are considerably more likely to think they work with HR on setting workforce strategy, but they are much less likely to believe they collaborate with HR on developing the company's annual budgets. (See Figure 1.)