Last year, Microsoft saved $88,000 in recruitment fees by using LinkedIn, while brewer SAB Miller saved $1.7 million employing 120 people directly from the site. KPMG found recruits through Second Life by holding a 48-hour virtual world jobs fair in September 2008, with more than 10,000 applicants registering for the event through KPMG's global website.

So what are the advantages of utilizing social media in terms of recruitment? Firstly, it is more efficient. Organizations can use social media to tap potential recruits much more easily by advertising vacancies and searching for recruits on LinkedIn, for example. However, LinkedIn and other social media applications can actually be used for much more than simply a job post site. Indeed, social recruiting can be used to increase effectiveness and forge new and deeper relationships between employees and employers. Rather than simply recruiting the person with the best-looking CV, social media can ensure that that person is also the best fit for the company.

Technology is essentially being used to provide better quality links to potential employees, developing and maintaining a relationship over a number of years, which can be tapped in to at later date. There are a number of ways in which this can be done, for example, LinkedIn, Facebook and other social networks offer the chance to form a community based on a topic determined by the organization. However, while an organization like Goldman Sachs globally invests over 100,000 hours each year in conversations with prospective employees, it is not always practical for organizations to put this much effort into their recruitment. That said, social media does make it simple for any organization to proactively develop some kind of relationship with potential employees to the best if its ability.

Social media applications are also being used to rate and compare employees, determine cultural fit and extend internal initiatives, like the referral scheme, to an external audience and using social media to compliment their hiring process: 75 percent are using LinkedIn for background checks and 48 percent are using Facebook for background checks. In fact, more than two-thirds of all HR professionals now run internet searches on job applicants. According to Microsoft, one in four HR employees has rejected a candidate's application based on their social networking profile, while only 37 percent of people see it as their responsibility to protect their online reputation.

It is interesting that despite a full 35 percent of employers who screen job candidates online presence choosing not to hire an applicant, so many job seekers continue to make mistakes or fail to clean up their profiles, particularly at a time in the market that is so competitive.

A difficult dilemma

While social networks are undoubtedly here to stay, whether they become a more central part to the hiring process or not is yet to proved, either way they are a resource that needs to be handled with care, using common sense and appropriate practices to avoid legal entanglements. A recent report from Taleo, 'Social Network Recruiting: Managing Compliance Issues', outlines some of key points to consider when using social media as a recruitment resource.

Firstly the report cites the potentially discriminating impact of using social networks in the hiring process because the labor pool does not fully represent the demographics of the general public. According to media analytics firm, Quantcast, only five percent of LinkedIn's members are African Americans and only two percent are Hispanic versus 12.8 percent and 15.4 percent of the population total respectively. Taleo's report quotes Jessica Roe, Managing Partner at the Minneapolis law firm Bernick, Lifson, Greenstein, Greenze & Liszt who says, "I anticipate more race and age claims over the next two years, and a significant proportion will be from sourcing through social networking sites...We'll see lawsuits."

While the practice of using social networking sites to help screen candidates is littered with legal dangers there is nothing wrong with rejecting a candidate due to personal characteristics. However, if this information is obtained through a social network it is impossible to ensure whether all the information uncovered will be job-relevant. While some information will undoubtedly be found on an application form or through an interview (such as gender and race) other information that is related to a country of origin, religious preference, disability, age or sexual orientation might not be.

And the mere appearance of discrimination can cause potential problems. If a business can prove that a hiring process was based on a test then a candidate won't have a case, but if it's based on softer criteria then it is difficult to prove that discrimination wasn't involved, particularly if a candidate is a fan of the Facebook page of Gay Rights or belongs to groups for expectant mothers, for example. If this is the case then some are bound to conclude that they weren't hired because they were gay, pregnant, disabled and so on.

The report concludes that due to the associated legal issues, social networks pose a difficult dilemma for HR departments. However, they are the best way to headhunt potential candidates, as well as verify resume claims and gain insight into a character. Currently there are no Office of Federal Contract Compliance Programs (OFCCP) or Equal Employment Opportunity Commission (EEOC) regulations regarding the use of social media or networks in recruitment. It is also important - from a screening perspective - to ensure that social networks are not used as a sole means for advertising, as this is perceived as discriminatory.

A federal court opinion that appears to be the first published decision that deals with social networking was in the US District Court for the Eastern District of Pennsylvania in December 2008, in which a would-be teacher named Stacy Synder who was unable to receive an educational degree required for a teaching certificate in the state. Snyder was engaged in a required teaching program she was assigned a high school teacher to supervise her, who was critical of her abilities, noting an ignorance of basic grammar as well as inadequate classroom management and inappropriate manner with students. When another teacher discovered Snyder's MySpace page where was wearing a pirate's hat, holding a plastic cup that said "drunken pirate" and had a "stupid expression" on her face, according to Snyder's own testimony. Also on the page was information that suggested her supervisor was the reason that Snyder would not by applying for a job at that high school.

Synder was suspended from the student teaching program and in the ruling against her it was decided that the school had no legal authority to award her a degree in eduction where she did not complete the required teaching program. While the decision does not deal with private employers, the case does contain important lessons for employers and recruiters.

The Taleo report suggests that HR departments can minimize risk by truly evaluating the use of social networking in certain situations and whether an alternate approach will work in its place. For example, if qualification verification is required there are well-established approaches to screening that pose no legal risk whatsoever.

There is no right or wrong way to use social media in recruitment - the best employers and employees will stay on top of the evolving trends - by keeping an open mind and logging in these tools will inevitably bring benefits of their own, but only time will tell just how important social media becomes to the recruitment world.