In Hire by Auditions, Not Resumes Matt Mullenweg writes about auditioning candidates at Automattic. The concept, in a nutshell, is to experience the candidate’s work and style with a trial period. During this time, the candidate is given actual work and paid an hourly rate. The candidate can do the work on nights and weekends, so they need not quit their current job–this is not a standard probationary period.
I’ve been on both sides of evaluations such as design exercises and programming tests. They are useful, but carried out as a step in a typical interview process, don’t allow much time for evaluation. These auditions seem like a much better way to vet employees and the additional work required to manage this process should payoff with decreased turnover.