I really like how my current company does their code test: We set out a basic test, but we make it very clear to the applicant we are not looking for the 'correct' answer. We honestly just want to see how they think through something, but more importantly, are they able to translate what they are thinking into actual code. We don't care if what they build gives the correct answer or not, just that they were able to build something and ask questions when they were stuck. Communication is way more important skill than if they can figure out an algorithm on the fly.
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I really like how my current company does their code test: We set out a basic test, but we make it very clear to the applicant we are not looking for the 'correct' answer. We honestly just want to see how they think through something, but more importantly, are they able to translate what they are thinking into actual code. We don't care if what they build gives the correct answer or not, just that they were able to build something and ask questions when they were stuck. Communication is way more important skill than if they can figure out an algorithm on the fly.