It gets rid of a lot of bullshit. At the end of the day, can you code on a team with the current team members is the main question.
If the candidate's breezing, ramp up a bit (& consider a higher level if hired). If not, calibrate down so candidate can still show skill.
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I also always let the candidate choose a rough area of interest (and tools) so they stay in their comfort zone.
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As for stuff like test suites, since we're working on a real world problem, we use what's there. Lots of allowances for "unfamiliar context"
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For clarity, typically at the beginning I whiteboard for a few minutes to give the candidate the lay of the land, ...
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... then dive into an area of the code that is relevant to the high level discussion. Setting the context for the problem helps.
End of conversation
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