I do coding interviews in the following manner: I select an interesting problem from a book. I personally complete the problem, measuring what was challenging and the time it took for me to complete the problem. I check the textbook solution, making notes of how my solution differs from the textbook's. If I like the problem, and if it fits with the development role, I invite the candidate to bring a development laptop, I give them a hard time limit of twice the time it took me to complete it, and have them share their screen while they attempt to complete it.
Afterwards we test their solution, I ask them some questions about it. I grade based on code taste, the number of hints they need, and their completion time. All candidates for a position are given the same question. Performance in coding interview is about two third's of the overall candidate evaluation. The ability to sit down and write good code in a time constraint manner is a very important part of being a developer.