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What's better for finding candidates for a development role: having the candidate solve a complex whiteboard problem or have the candidate refactor some code (maybe a couple of small modules) while explaining as he/she goes through each step?

I personally feel both are good, but I think refactoring is a very much needed skill when you're dealing with the complexity of millions and millions lines of code, so being able to change your inital design to make it more readable and flexible later on is crucial. And refactoring usually goes hand and hand with having tests in place.

An interesting exercise would be to give the candidate a test suite with the corresponding code that's tested in a working state and let the candidate decide how much refactoring needs to be done. In the process the candidate would need to break and fix tests of course while changing things... it'll give a good measure of their ability to take code and change it to a "better" state of design and flexiblity.

On the other hand I do think there is a place for cliche white boarding problems because it really shows one willingness to tackle complex problems which do arise in most development jobs. Asking the questions and being persistent goes along way and can really help when you're collaborating with other developers to solve an issue at hand.

Overall I think there should be a white board problem, but I don't think that should be the deciding factor. Rather couple it with other very practical skills you should have as a developer already; among those being refactoring.

Comments
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    I’ve never had to go through an interview where I’ve had to code stuff, but I think both approaches have their merits, but getting the candidate to explain as they goes shows they understand what they are doing and why they are doing it.

    It’s possible for someone to solve a complex problem, but not fully understand why what they’ve done has worked, if that makes sense
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