Pre-hire scenarios would need to be simple but not trivial. For example, you could have a homeowner who has discovered a homeless man asleep on her front porch. The homeowner could be instructed to be very upset and frightened for her safety and the homeless person instructed to comply with orders, but to leave only if ordered to. Throw in a nosy neighbor for good measure. Such a scenario would give a good idea of the prospective recruit's ability to function in a confusing situation with several people competing for attention.
As a bonus, you would get a quick sense of the recruit's ability to think ahead about the consequences of decisions--if he just boots the homeless man off the porch, where will he wind up next? Does the recruit think about problem-solving and long-term solutions to problems?
Once a person was hired, scenario-based training built into the academy from the beginning would help the recruit develop scene-management skills. As recruits move through basic training, they could be presented with increasingly demanding situations. By the time they graduate, even before they've spent any significant time on the street, they would have accumulated an experience "bank" that would improve decision-making--or make it clear that a particular recruit should consider a different career.
One instance of a recruit being unable to function should not necessarily end a career--we've all made mistakes and learned from them. But repeated failures should not be ignored. Without scenario-based training, the only way to find out if a rookie can hack it on the street is to put him out there--for a long enough time to see if he or she can learn from experience. Too often the cost of failure is measured not only in dollars, but also in damaged public confidence, and even in lives lost.