The best manager I ever had taught me a valuable lesson: If someone needs to know something, just tell him. Even if it's uncomfortable information, he's better off hearing it earlier rather than later, and personally rather than impersonally.

So I'd just pick up the phone and tell him, simply and directly, what he needs to know. I'm not being mean. I'm just telling him something he needs to know. If he responds professionally, I still may have made a valuable contact. (If he responds poorly, then I was right not to hire him.)

"We've decided to go with a different candidate, but I want to thank you for all the trouble you went through to interview. And if I happen across an opportunity you might be interested in, is it okay if I contact you?"

Maybe not those exact words. But he needs to know, and if you can't tell him in person, the phone is the second choice.

-TimK