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(Fortune Small Business) -- BreakingPoint Systems, a company that provides tools for testing computer networks, could have run an ad: "Seeking marketing director with social media expertise." Instead, the 65-employee business, based in Austin, let the ideal candidate find it by using Twitter, the popular microblogging service that allows users to send messages of no more than 140 characters.

Pam O'Neal, BreakingPoint's vice president of marketing, received tweets from Boston marketing professional Kyle Flaherty expressing his interest in the position. (Flaherty had heard about the job from a former colleague who does business with BreakingPoint.) Impressed with Flaherty's experience, communication skills and blog, O'Neal began a Twitter exchange with him.

Within weeks of first contacting O'Neal, Flaherty headed to Austin for an interview and met the company's executive team, including CEO Des Wilson. After several more weeks of Twitter exchanges, Flaherty accepted BreakingPoint's job offer and moved his family to Texas.

"I wasn't always a social media fan," Wilson says, "but it lets you reach creative leaders like Kyle."

The company now does much of its recruiting through such sites as Twitter, Craigslist, Facebook and LinkedIn. O'Neal says social media tools are especially attractive for small businesses eager to cut hiring costs. Contracting a recruiter to find an executive who earns $150,000 annually can cost $15,000 in fees. Posting ads on job search sites like Monster.com (MWW) could mean spending hundreds of dollars -- and precious hours poring over resumes. In contrast, social media tools are mostly free and offer added value: Candidates bring their own online networks, blog content and references, which speeds up the interview process.

Like BreakingPoint, Cincinnati-based Lucrum, a 100-employee IT consulting firm with 2008 sales of $15 million, recently began using social media to recruit.

"It can give you deeper insight into a potential employee," says David Bowman, Lucrum's director of marketing. He notes that this more personal approach to hiring can benefit smaller businesses, which often place a premium on finding employees who fit the company culture. "One bad hire for a small company can be a death knell," he says.

But Bowman admits that social media isn't a magic bullet. "Its biggest drawback in recruiting is that it won't help you appreciate nonverbal communication dynamics," he says. "While Facebook, LinkedIn and Twitter can provide a wealth of information about a potential job candidate, they aren't substitutes for face-to-face communication."

Utilizing social networks to hire could also reduce workplace diversity, warns David Teten, CEO of Teten Advisors, a private investment firm in New York City.

"Generally sociologists find that people's social networks tend to be made up of others like them," he says. Complying with employment discrimination laws is just one reason to consider diversity, Teten observes. "If your workforce looks just like you, you'll have a more homogeneous worldview and be less likely to learn of outside market opportunities," he says.

Tableau Software, an 88-employee Seattle software firm, has mined social networks such as Craigslist, LinkedIn and Twitter to recruit employees. But the company, whose 2008 sales totaled $20 million, has also reached beyond these sources to search for highly specialized workers. Earlier this year, when Tableau CEO Christian Chabot needed a Web developer well versed in Drupal, a content-management platform used to publish Web content, he skipped LinkedIn and went straight to social-networking sites where Drupal enthusiasts gather. Tableau hired a developer it discovered in the Seattle Drupal user group.

To be sure, social media enables businesses to find talented employees efficiently. But getting to know the person behind the blog post, profile page or tweet is essential for companies determined to thrive.