We do the take home tests because it allows the candidate to work in a more natural way, without the pressure of completing in an hour, under scrutiny and in such a highly consequential circumstance. Also, we allow as much time as they need to take to get it done. Some come back in a couple of days, some in a week.

Then we have them present their code in a code review in front of the team. This gives a good indication of their ability to explain their thinking and approach clearly and is a good read on their communication skills.

So far, no complaints, though it is true that many of them get a bit wrapped up in the exercise and spend far more than the 2 hours we are asking for.