Some people are very good at whiteboard interviews, others at take-home exams.
From a company perspective, if you really can't tell whether they lack competence or just folded under pressure, you pretty much have to pass on them and try again with the next candidate.
I have myself come to conclusion that this is largely due to brain architecture. Notably the same part of the brain is responsible for coding as for speaking. Asking people to explain their thinking to an unknown person with unknown criteria takes a huge amount of brain capacity exactly from the parts of the brain one needs to program.
Additionally, the normal way experienced programmers approach these types of problems is to utilize background processing in the brain. They first encounter the problem, then they aim to understand it well. Then they go take a coffee, or even sleep on it, while the brain is working in the background unconsciously, and then at some point an innovation comes almost unbidden. The coding interview set up doesn't measure this real problem solving capability in any way. This is why experienced people become stumped, because it is not the way they actually solve the problems in the real life, and they might not even be aware of why their brain seems to not work suddenly.
This might even flare up their impostor syndrome which is a common professional hazard if they think they have failed in something they should have succeeded in. It is not only a bad way to interview and screen people, it is discriminatory and materially abusive.
For many people, it is episodic/random; performance is variable by day, hour, and situation.
That's not unlike math olympiad competitors or competitive coders who by repetition generate a skill for those types of problems exactly.
Guess what, I just turn off the laptop and go hiking.
For a year. And then after that year I’ll try again. You’re not playing the game you think you are.
Look, how would you know your interview process isn't filtering critical numbers of good engineers?
You have no control group for that assertion. None.
And engineers are known to be neurodivergent more than your usual meatsack.
For example, your assertion works really well if the subconscious goal is to only hire white people. After all, black people sue for discrimination to better to be safe and avoid them.