McKinlay left his post as O'Neill's deputy to become the Hornets' new head coach at the end of last month but was out of a job within just eight days as the club's quixotic owners decided to appoint Slavisa Jokanovic as their fourth boss of the season.
In his brief time in charge the former Scotland international took four points from two games and O'Neill struggled to hide his frustration at McKinlay's circumstances.
"I'm very disappointed for him, and really I think Watford have to look at themselves," he told Sky Sports News.
"Billy's not done anything untoward there - he went in in difficult circumstances, got a win and a draw and suddenly finds himself out of work again which is very poor.
"There's a human aspect to football as well and I think the owners, technical directors and chief executives need to consider that when they're playing with people's lives in this way."
O'Neill has been preparing Northern Ireland for Saturday's home match against the Faroe Islands and the trip to Greece three days later.
It is the first time he has worked with the squad without McKinlay's input, with Irish FA elite performance director Jim Magilton and youth team coach Stephen Robinson helping out on this occasion.
As both men already have full-time roles a return for McKinlay is still possible but it is not a situation O'Neill has yet contemplated.
"That's something that's really not for now," he said
"We've kept communication going over the week and that's something we can address down the line
"This week we've not really been affected too much because Jim Magilton and Stephen Robinson have stepped in and done an excellent job."
Source : PA
Source: PA