Maybe for Google-type/scale problems, but I'd say that the engineers I've worked with and hired for "normal" software jobs (e.g. here's a boring business domain, make it CRUD, make an API, make a UI for it) - there is almost an inverse correlation between being a CS/algorithm genius and being happy/successful at these everyday roles.

From observation, many super sharp CS people very frequently want to write systems from scratch, get bored, then move on. It's really hard to pull them back to use off-the-shelf tech, don't over optimize, etc. Many of the best folks I've worked with in these roles are not CS majors at all (EE, ECE, etc) and this algo screening would filter them out.