When I have been hiring, I make sure to inform candidates that aren't hired. If I have been far enough with them that we actually met, I have so far always offered to explain why they weren't picked, over the phone. Not only do I think it's a decent thing to do, but it also forces me to be very conscious about what I'm selecting for, since I know I may have to explain it later.

I've had some awkward conversations as a result of this, but nothing I regret.

I'm fully aware that this doesn't scale well, but it works fine for me.