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To understand the nature of the system, Likert stresses that the manager must grasp the relations between and among three types of variables:
1. Causal variables: independent variables that determine the course of developments within an organization and the results achieved by the organization.
2. Intervening variables: mediating variables that reflect the internal state and health of the organization.
3. End‑result variables: the dependent variables that reflect the achievements of the organization.
As an illustration of how these three classes of variables interrelate, we can consider the example of the effect of leadership style on productivity. In many situations, it would be assumed that a participative leadership style would be more effective than an autocratic style. This premise can be tested by correlating leadership style (causal variable) with employee motivation (intervening variable), and then correlating employee motivation with productivity (end‑result variable). In this way it could be demonstrated that leadership style has an effect on productivity, but via employee motivation.