Thx for your post, here is another related thought:
We have been doing a 15 minutes max low level coding exercise in the language and tools of choice of the candidate very early in a lengthy process to "filter" candidates that don't have basic coding skills. And even though we encouraged the candidates to use all the sources and ask any questions they like to solve it, it did filter out people with bachelor degrees.
This way we didn't spend time for a two hours pairing session that most likely wouldn't have led to anything.
That being said we are currently trying to simplify/shorten/improve our interview process...
I agree this could work as well. However, IME I am yet to come across a CS major or a Software tinkerer who couldn't code.
A possibly related point is coding != programming. I view coding as the ability to express an abstract solution (aka pseudo code of algo+data structure) in code while programming as the ability to work up the abstract solution and then coding it. With this view, testing for coding skills can be separated from testing for programming skills; this will help interviews be more focused and quick.
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