Situational judgement tests: Smarter hiring, stronger teams

Making the right hiring decision is one of the biggest challenges for any business, but for start-ups and growing companies, the stakes are even higher.

A poor hire doesn’t just cost money — it can slow growth, disrupt team dynamics and create uncertainty. Yet hiring remains a gamble for many businesses, relying on gut instinct, CVs and unstructured interviews rather than real data. That’s where situational judgement tests (SJTs) come in.

Used by FTSE 250 and Fortune 500 companies, SJTs are one of the most widely applied psychometric tools in the world. Providers like Talogy alone deliver over 30 million SJTs annually across 50 languages, proving their effectiveness at scale.

These assessments are designed to evaluate how candidates think and act in real workplace situations, offering deeper insights into their ability to solve problems, work under pressure and make decisions.

For large corporations, SJTs have been a staple for years — helping companies streamline hiring, reduce mis-hires by up to 30% and improve long-term retention. But what’s changed in recent years is accessibility.

Today, SJTs are no longer just for big enterprises. They’re now a low-cost, high-impact tool that start-ups, scale-ups and smaller businesses can use to hire smarter, reduce risk and build stronger teams — all without breaking the budget.

What is a situational judgement test?

At its core, an SJT is a structured assessment that presents candidates with real-world workplace scenarios. They might be asked to choose the most effective response to a team conflict, prioritise tasks under tight deadlines, or handle a difficult customer request. Unlike traditional psychometric tests that focus on abstract ability (like numerical or verbal reasoning), SJTs assess how people think, decide and act in realistic situations relevant to the role they’re applying for.

This makes them especially valuable in roles where judgement, problem-solving and behavioural fit are critical. SJTs are widely used in industries like customer service, leadership, logistics and sales, where decisions need to be made quickly, under pressure and with the right mindset.

Why are SJTs effective?

Traditional hiring methods — like interviews and CV screening — can only go so far in predicting how a candidate will perform on the job. Research shows that CV-based hiring decisions have a validity coefficient of just 0.10 to 0.26 (Schmidt & Hunter, 1998), meaning they are weak predictors of future job performance.

In contrast, well-designed SJTs have a validity coefficient of 0.34 to 0.50, making them significantly more effective at predicting job success (Sackett et al., 2021). They also:

• Reduce hiring bias by assessing responses to real-world challenges rather than relying on subjective interviewer opinions

• Improve hiring accuracy, increasing selection validity by 24 to 32% over CV screening alone

• Boost retention, helping businesses identify candidates who are more likely to stay and perform well long-term

This level of predictive accuracy is why 72% of Fortune 500 companies and 68% of FTSE 250 businesses now use SJTs as part of their hiring process.

Making SJTs work for start-ups and growing businesses

For start-ups and smaller businesses, hiring decisions carry an outsized impact. A single mis-hire in a small team can disrupt productivity, create cultural challenges and lead to costly turnover. The problem? Many smaller businesses don’t have the same recruitment infrastructure as larger companies.

SJTs offer a simple, scalable solution — one that doesn’t require huge budgets or in-house HR teams. For as little as £100 per assessment, businesses can integrate scientifically designed, role-specific SJTs into their hiring process.

Here’s how:

• Define the key competencies needed for success in the role. For example, resilience and adaptability for a sales position, or emotional intelligence for customer service

• Select an SJT tailored to those competencies. Role-specific assessments ensure candidates are evaluated against the real challenges they’ll face

• Use the results to guide hiring decisions. Instead of relying solely on interviews, SJTs provide objective, data-driven insights to support decision-making

Final thoughts: A smarter, more accessible approach to hiring

For too long, the best hiring tools have been reserved for large enterprises with big budgets. But with the rise of affordable, accessible SJTs, businesses of all sizes can now benefit from the same predictive accuracy, hiring confidence and workforce optimisation that global organisations have relied on for years.

For founders, start-ups and growing teams, making smarter hiring decisions isn’t about spending more — it’s about using the right tools. And with SJTs, that tool is now within reach.

Relevant resources

• Seven ways to hire and retain top talent without spending a fortune

• Back to basics: The four keys to retaining staff

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