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.)

Perhaps as a result of this collaboration, the majority of managers in both functions see their reward programs as successful: Around 60 percent believe reward programs are aligned with the company's talent goals, are instrumental in driving the behaviors needed for profitable growth, and are producing an acceptable return on investment (ROI). However, finance executives are considerably less likely than their HR counterparts to see their organizations' reward programs as aligned with the company's financial goals or structured to discourage excessive risk-taking. (See Figure 2.)