It is essential to device "performance, contribution and efficiency based" revenue sharing model in MDFs. Explain.

In the long term success of the MDF the revenue sharing model has to be designed to suit the given situation. Partners may adopt simple revenue sharing model to share profits and losses equally. In this model it is assumed that each one is bringing equal business and generating equal revenue. However, in reality if it doesn't happen it may give rise to sense of discomfort against the person who is continuously showing less contribution but at the same time getting equal share of profits. Therefore, it is essential to device "performance, contribution and efficiency based" revenue sharing model. Assume a situation where A, B, C, D and E are the partners expert in different disciplines. The revenue sharing model could be the following: Partner bringing new client shall be given referral or induction share, say, @ 15% of the fees settled and received; it can be for the first year or for given number of years; Certain percentage of fees, say 15% shall be retained in business in common pool for meeting expenses; 70% of the fees shall be given to the partner of partners who actually work on the assignment (assignment share). When more than one partners are involved in an assignment their share can be determined based on respective role; At the year end after meeting expenses resultant profit shall be shared in proportion of contribution of individual in the gross earnings/net profit of the firm; Internally, different verticals can be created and surplus generated by each one can be assessed as an independent cost centre. This model motivates each partner to bring more and more business into the firm and also to work for maximization of his share and wealth of the firm. There could be more tailor made revenue sharing models, however, the model based on performance, contribution and efficiency is likely to work better.