The Spurs boss said his players lacked character in the second-half at Stamford Bridge, suggesting they were "too nice" and "need to show a bit more guts" - adding that there are some members of the squad he "would not count on".
However Hoddle, who managed Tottenham from 2001 to 2003, feels he should have kept those opinions in the dressing room and says Sherwood needs to prove his managerial credentials when his team aren't playing well.
"It's a different era now," he told Saturday Night Football.
"I agree he was very honest but personally that's something you say in the dressing room to the players. You might come out and disguise what your feelings are.
"Management is about when things are going wrong. When you're playing well and winning, it's easy to be a manager of a Premier League side.
"He's being tested now. His testing time is coming now because of this result and other results like Norwich away. That's when Tim Sherwood is going to be tested as a manager.
"But it's not his fault that his players went and made those mistakes, they were individual mistakes.
"That's not down to the manager. He didn't set them up to make those mistakes."
Sherwood also said Tottenham were unlikely to finish in the top four this season after falling four points behind Manchester City who've played three games fewer.
Sky Sports expert Jamie Redknapp agreed with that assessment, citing individual errors that led to three of the four goals Chelsea scored on Saturday.
However, he admires Sherwood's passion and determination to do the job in his own style.
Redknapp said: "In a way for a lot of people, that is refreshing because he's probably saying what every Tottenham fan thinks tonight.
"It's very easy to turn around and say 'we did alright and needed a bit of luck here and there', but he was just honest and straight down the line.
"People are talking about Tottenham having to get into fourth if he's going to keep his job. I find that absolutely ridiculous.
"They have finished fourth twice in the last 23 years, so what makes them have a divine right to finish fourth this year?
"The players they bought in the summer - Capoue, Chadli, Lamela, Paulinho, Eriksen... half of them weren't even playing today and were on the bench.
"If Tim wants to build a squad and a team capable of competing to get in the top four, they have somehow got to be signing better players to be part of that squad.
"What I will say is that is a man who is going to live and die by this. He is going to tell his players exactly what he thinks, whether they like it or not.
"This is probably not the modern way of doing things and if Tim doesn't like it, then he probably won't play them next week."