Why does one's mind swing between different moods based on external circumstances? This is an objective question even though the example I have mentioned below is subjective.  Is this a universal phenomenon, or is it only something that I have perceived?


  Scenario1:
  
  Event: This person has either done a good job or asked a good question during meetings.
  
  His/Her Mind reading: He/She feels that everybody are impressed with the job done or  with the question. 
  
  Reaction: He/She feels a sense of worth, feel good, also feel better because of sense of job security etc.





  Scenario2:
  
  Event: This person has fail to do a job or done it but not upto the expectation or didn't raised questions or actively participated in meetings.
  
  His/Her Mind reading: Afraid that his/her manager or others might feel that this person is not having the potential.
  
  Reaction: He/She feels lack of confidence, anxiety, depression because of job security, feeling miserable about herself/himself, fear that he/she may lose the job.


I want to know the root cause of this thought process and what clinical methods are used to resolve it.
Abnormal psychology is a tricky thing. You did not give us enough information to determine accurately which disorder you might be referring to. The reactions you describe sound rational: a pattern of responding with a positive emotion to positive experiences and negatively to negative experiences. Mental illness can be thought of as extremes of normal emotions for the sake of this discussion so what really matters is how frequent and proportionately the emotion was to the stimuli. It is normal to feel sad when you fail at a task and when more major events happen in life it is normal to absolutely grieve for a short time. At a point the response becomes abnormal (it interferes with normal life tasks or the correct response is is repressed) and can be treated by medication and therapy by a psychiatrist and/or psychologist.

The person you describe might be perfectly normal needing no treatment. They might have ADD with depressive features which is treated with dopamine receptors enhancers like Aderall. I think every working person on the planet would like ADD medication as they are a performance enhancing drug however the side effects make them unsuitable for all people. They might be bipolar which is treated with mood stabilizers like lithium and anti-psychotics like zyprexa. They might just be depressed which is treated by anti-axiety/depressive medication like celexa an SSRI (selective serotonin reuptake inhibitor). Maybe even some kind of performance Obsessive Compulsive Disorder which is treated with anti-anxiety medications or anti-psychotics sometimes. Maybe their poor performance was caused by poor quality or quantity of sleep and a sedative like Ambien is used the treat the insomnia. I'm sure there are a whole host of other illnesses and treatments that might fit the profile you describe and it is impossible to know without more information and a doctor's diagnosis.

Talk therapy treatments are more diverse than drug treatments. With many different combinations helping various illnesses. Common treatments include Cognitive Behavior Therapy (CBT), Psychodynamic, Individual or Group counseling. Each practitioner implements talk therapy differently following a general guideline.