This paper presents a simple theory and test of an efficiency hypothesis for academic tenure and the process by which it is granted. Our approach argues that tenure is a response to the high cost of measuring academic potential and has survived as a low cost method by which the university can better match potential entrants with incumbents and so promote superior performance by its departments. The probationary period leading into the tenure decision then becomes one where coordination gains can arise from better measurement, evaluation, and integration of new faculty. It follows that tighter tenure standards require greater evaluation efforts with greater turnover and success should result in superior department performance. To test the hypothesis, Dnes and Seaton's (2001) distinction between UK universities that prior to 1988 offered hard versus soft forms of tenure and data from the UK Research Assessment Exercise are used . After controlling for more easily measured inputs into department performance, tenure status remains a positive predictor of ranking across UK departments of economics.