Hiring manager who recently added HackerRank to our interview process here.
While far from perfect, I think these types of systems do have some advantages. Keep in mind, I think they are best used as a tool for pre-screening candidates for graduate positions (where we have a LOT of applicants), or candidates we may otherwise pass on due to a lack of well known engineering school or well known companies on their resume (and I'm sensitive to this given that I moved to SF with neither of these). Also, my company is in a very technical problem space, so we do actually use algorithms + data structures on a daily basis.
* I don't buy the "I have 5 years of experience, I should be exempt from coding in HackerRank / phone screens / on-site technical questions" argument. I've done interviews with many people with years of experience and Senior Engineer on their resume, who are unable to solve trivial problems like finding simple patterns in an array. This might not be the majority, but it's enough to create a lot of noise in resume screening.
* As a hiring manager, my job is to make sure that engineers on our team are not getting pulled from their day to day work to do phone or on-site interviews with sub-par candidates. While lots of people on HN tend to complain about interview processes, the reality is that once you start at a job, most of the time you want to focus on writing code and solving technical problems, not performing multiple phone screens per day. Designing a good interview process involves BOTH creating a good experience for the candidate, and not overwhelming your existing team.
* Certainly a strictly better alternative is take-home challenges (which we used to use, and still do for some candidates). However, to get any valuable information from these (and give justice to candidates who spent a couple hours building something), an engineer on our team has to spend time unzipping, running and looking through them, and writing up their thoughts. This might take 30 minutes of their time, and probably an hour or more out of their flow. To do this with more than a couple candidates per week is not possible (not to mention the fact that understandably engineers might not get around to reviewing it for a few days, which is not fair to candidates). For this reason, I think simpler HackerRank type challenges are a better way of pre-screening candidates.
* As a candidate, HackerRank is one of the easiest possible steps for you to pass. Almost all of the problems are up on their website! They may not be exactly the same as the ones given to you by specific companies, but there is a lot of overlap in these types of questions. If you spend a few hours practicing you will be able to ace almost any HackerRank challenge given to you.
That said, HackerRank is a tool, and I think there are a few implementation details needed to make it work well:
* Many of the suggested questions for candidates are terrible (e.g. "will this code compile", or really unclear problem descriptions). For our quiz, I chose all the questions and answered them myself before ever giving them to candidates. If a company lets their recruiters set up a default quiz, it will be really bad for candidates.
* As I mentioned, we usually use this for grads, or candidates who we are not sure about based on resume alone. If you come in through a referral, cold outreach, or TripleByte (who only work with really high quality candidates) you usually get to skip this step.
* I don't think these systems can every tell you how good a candidate is. They can and should only be used as a method of filtering out candidates who don't meet a minimum standard. As others have mentioned, writing algorithms is only part of the job of a good engineer, and they do nothing to test your architectural skills, teamwork skills, motivation level etc. For this reason we only use it as part of our hiring process, as a minimum bar for entry into further interviews.
I'm also constantly looking for ways to improve our hiring process, so open to suggestions to any of the above.