O'Neill has yet to win a match in charge of Northern Ireland, having lost three and drawn four of his first seven matches.
These include home draws against the likes of Luxembourg and Azerbaijan, but Hughes believes that the draw away to Portugal in October shows that the side is moving in the right direction.
"We're still building on a lot of things. With Michael coming in and the way he wants us to play, I think the lads have actually taken that on pretty quick because there is a lot of attention to detail and there's not a lot of time to work on it," said Hughes.
"We got our rewards in the game against Portugal, that was all down to the shape and the discipline and hard work. We don't go there expecting to have 45-50% possession, we know we could come away with 20% possession, but we've come away with a point. Then you flip that in the game when we came home. It's still difficult to break teams down. The last game we played (against Azerbaijan), we literally threw everything at them and it was just one of those games where it wouldn't go in.
"We could go through this campaign and have a good go at it, maybe come up a little short, but I think, for the future, if we can keep this group together as much as we can, I think we could get back up there really pushing for qualification again."
Northern Ireland currently sit fourth in their World Cup Qualifying group, four points behind Portugal and Israel.