Now that I've been through the academic job application process from both sides, people have started email me for advice on cover letters. Here's what I've written back. (I know this is late for TT jobs this year.)
1. The cover letter should be consistent. A consistent theme should run throughout the whole thing, not only through the cover letter but also through the other application materials. Consistency (within a broad framework) is preferable to eclecticism.
2. It should be modular. Your cover letter should have compressed versions of the rest of your application, even to the point of recycling language. The research paragraph is a brief version of your research statement, the teaching paragraph of your teaching statement, etc.
3. Lean into your strengths. Do you have a lot of teaching experience? Highlight that! Have you helped organize conferences, events? Highlight that! Never explain what you haven't achieved; describe what you have and what you plan to achieve.
4a. Steal language from the job listing. It helps with the elusive question of "fit." It gets you past the committee's initial quick read of your letter, the one that lasts about 30 seconds. Here's an example from my own application:
4b. I mainly work on 8-10th cent Chinese Buddhist poetry. UCSB's ad was for "premodern (3rd-12th cent) Chinese lit & cultural studies," so I wrote "premodern Chinese lit & cultural studies" in my app instead of "classical Chinese lit" and said I could teach "3rd-12th cent."
4c. The ad also listed "manuscript studies." I've worked on a particular manuscript corpus (Dunhuang), so I highlighted that in my app, even though I hadn't considered "manuscript studies" per se as one of my main fields of research.
5. Finally, remember there's so much beyond your control: what your recommenders say, the hiring committee's internal battles, the way the chair's breakfast sat with them when they read your app. All of it can affect your chances. Whether you get the job or not, it's 90% luck.
Appendix: here's the structure of a good cover letter. It's a standard formula, no more than 2 single-spaced pages. There's probably a version of this at the Professor Is In, but this is my version:
I. Dear Professor [surname of chair] and Members of the Search Committee,

[p1] I write to apply for [name of position]. I am a [current position] in [name of department] at [current university]. {PhD students:} I expect to attain my degree by [date].
II. [p2] [paragraph describing the key points of your dissertation: what's the big thesis, what sources do you use, what methods, why is it exciting]

[p3] [1-2 short paragraphs describing other projects, making sure that they seem related to your dissertation in some way]
III. [p4] [paragraph describing your activity in the field: conferences, invited talks, events organized, etc.]

[p5] [1-2 paragraphs about teaching; mention specific classes you could offer, briefly allude to your teaching philosophy]
IV. [p6] [paragraph summarizing your most important qualities, which should look like the language of the ad]

[p7] Please find attached [list of other application materials] and contact information for [#] letters of recommendation from [names].
V. Sincerely,
[scanned image of your signature]
[your typed name and contact information]
/end.

I just hope this is useful to someone out there!
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