When I interviewed for my current position, I was handed a coding test. Turns out the previous applicant had "exaggerated" her ability to code in the language (Informix 4gl). References had not uncovered the gap in her technical expertise. She'd lasted a miserable 6 weeks, been unable to produce and was let go. After that fiasco, my company came up with the coding test.

When I had to conduct interviews for a LAN manager position, we were asked to take one of several internal candidates. None of them were doing IT work for a living, so I came up with a list of interview questions that tested knowledge and expertise. I used references to evaluate the "soft" qualifications that I valued: communication, motivation, professionalism. It worked very well and I'll use the same combo again. Test for the technical skills, get references for the people skills. And get them before the offer is extended.

Dave