This only happens because passionate, eager designers are willing to do it. It's a bit of a chicken-and-the-egg game, but I can say that if designers as a whole rejected these types of design challenges in job applications, they simply wouldn't happen.
What's more, these type of challenges aren't particularly effective at finding a qualified candidate. In a worst-case scenario (for the employer), what's to stop someone from farming out the work to someone else and landing a job they are wholly unprepared for, on the basis of someone else's work? In a best case scenario, the work is a reflection of the candidate's ability to work in the dark, with poorly-defined business requirements, unable to ask clarifying questions and unable to work with stakeholders to provide the best-guess solution possible to compete with other candidates and the interviewer's own biases.
I'm going to go off on a bit of a tangent, because why not? and because this is a topic about which I'm particularly passionate.
I'm not against design challenges, per-se, but in my opinion they need to conform to a specific set of rules to give useful results:
- Design challenges should be done in-person. This helps the interviewers gain real perspective into a candidate's interpersonal interactions and communication skills. It also helps interviewers visualize how a candidates synthesizes information from different sources to gain specific design direction.
Design challenges should not focus on the company's existing product. There's too much bias built in for candidates to be truly successful on the existing product, and it's patently unethical to ask candidates to complete work for free on the basis of the possibility of employment.
Design challenges should be done on a whiteboard. A lot has been said about whiteboard interviews, both good and bad. Certainly it has its drawbacks, but they do allow for clear communication and invite collaboration. Additionally, the ability to effectively whiteboard ideas with stakeholders is paramount to the success of any UX designer. Now's the time to find out just how good they are at it.
Design challenges should be done with a fixed time limit. Apart from evaluating their ability to work on a deadline, setting a time limit helps to ensure that the candidate doesn't get tied up too much in nitty-gritty details and focuses on achieving their goal. It also helps move things along in the event of multiple interviews being scheduled on the same day.
Each candidate needs to address a unique challenge of relatively equal difficulty. This helps avoid biases against specific design solutions and focuses the interview on how candidates think and interact with business stakeholders.
Speaking of stakeholders, business stakeholders should be represented at the interview by the interviewers. The candidate should be able to ask clarifying questions across business units. This helps evaluate the candidate's ability to ask appropriate questions, to work across business lines, and build a consensus before diving into a project.
There should be some sort of monkey wrench or two thrown into the works-- a requirement that changes mid-design, a stakeholder that gets replaced with a new individual with new ideas, or an increase/decrease in time to deliver a design. This helps evaluate how candidates react to a changing design environment, an important aspect of their overall ability as designers.
For what it's worth, you can find a wealth of simple UX challenges all over the internet, but some of my favorites are here.
Get experience in any way you can. Practical experience will trump education 10 times out of 10. Work on your own projects, do UX evaluations, work on an open-source project, volunteer your services to non-profits-- in short, do whatever it takes to get some work under your belt.
Keep learning. This isn't optional. The nature of the internet is forever fluid, and nobody ever knows everything about a particular topic. The more you learn, the more you'll find what interests you, and you'll begin to develop your own specialty. The more specialized and exacting your knowledge becomes, the more valuable and effective you'll be in particular roles. Seek out jobs that cater to your strengths.
Network. Go to meetups, conferences, hand out business cards, and be a personable person-- even if you don't feel like it. You can never know too many people in the business, and opportunities will come your way based on the people who know you and your expertise/passion.