DECLARE @Manager hierarchyid
DECLARE @Sibling hierarchyid

SELECT @Manager = NodeID FROM Employee
WHERE EmployeeID = 3

SELECT @Sibling = NodeID FROM Employee
WHERE EmployeeID = 2
-- This variable represents Amar

INSERT INTO Employee
VALUES(@Manager.GetDescendant(@Sibling, NULL), 1, 'Ajit')

The parameters to GetDescendant are the two nodes between which we want to insert the new node.
Let us now check the table data.

SELECT * FROM Employee

The hexadecimal output is unhelpful. Let me add a function to the query.
SELECT NodeID, NodeID.GetLevel() AS NodeLevel, EmployeeID, EmployeeName FROM Employee

The GetLevel() function as you would have guessed, returns the level of the node. Let us add nodes at the next level.

Inserting the Second Level
To insert the second level of hierarchy write the following lines of code:

DECLARE @Manager hierarchyid
DECLARE @Sibling hierarchyid
SELECT @Manager = NodeID FROM Employee
WHERE EmployeeID = 1
-- This variable represents Ajit

INSERT INTO Employee
VALUES(@Manager. GetDescendant(NULL,NULL), 4, 'Abhijit')

Let us add Anand next.
DECLARE @Manager hierarchyid
DECLARE @Sibling hierarchyid

SELECT @Manager = NodeID FROM Employee
WHERE EmployeeID = 1
-- This variable represents Ajit

SELECT @Sibling = NodeID FROM Employee
WHERE EmployeeID = 4
-- This variable represents Abhijit

INSERT INTO Employee
VALUES(@Manager.GetDescendant(@Sibling, NULL), 5, 'Anand')

Let us now query and check if the levels are as we desire.

SELECT NodeID, NodeID.GetLevel() AS NodeLevel, EmployeeID, EmployeeName FROM Employee

Let me introduce another useful function with hierarchies.

SELECT NodeID, NodeID.GetLevel() AS NodeLevel, NodeID.ToString() AS NodeLocation,
EmployeeID, EmployeeName FROM Employee
ORDER BY NodeLocation ASC

If you have some experience with the Windows folder hierarchy, it would be easy for you to understand the output of the ToString() function as applied to the hierarchyid data type. I leave adding the last level to you as an exercise.

Conclusion
Hierarchies can get much more complex than what has been demonstrated. I would encourage you to refer to online books for a thorough understanding on the usage of hierarchies.
You would also need to learn when to use this new approach as opposed to storing hierarchies in XML and in self-referencing tables.

Amaresh Patnaik