When in doubt, lead with a joke.

That trope of public speaking is also good advice for CEOs and founders. Among all the exhortations that leaders be inspirational, motivating, clear, charismatic, and passionate, the demand that they also be a hoot seems superfluous. In fact, humor is among a leader's most effective tools. Use it well, and employees will both respect and like you more.

Leading with humor

Professor Jennifer Aaker and lecturer Naomi Bagdonas teach a course at Stanford about humor in business. The average age of their students is 23--coincidentally the same age at which people's assessment of how funny they are sails off a cliff, according to a study by Gallup. It's also around the time people start laughing less.

Leaders with humor can build stronger cultures, unleash more creativity, and even negotiate better deals. "We hear from young leaders about the incredible pressure of being the face of their organization," says Aaker. "Many struggle because they hold onto the false dichotomy between bringing humor and taking your work seriously. The right balance of gravity and levity gives power to both."

Organizationally, research shows cultures that incorporate humor are more resilient. It's also helpful in times of stress because it releases oxytocin, which facilitates social bonding and increases trust. That social lubricant also makes it "a gateway drug to broader aspects of authenticity and vulnerability," says Bagdonas.

Humor isn't failproof

Research shows that displays of appropriate humor raise perceptions of confidence and competence, which in turn increase status. Humor is also linked to intelligence. Even laughter--if it's loud, variable in tone, and higher in pitch--suggests higher status. The presumption is that people in power are more uninhibited and comfortable expressing emotions.

While displays of inappropriate humor can also signal confidence, they can reduce perceptions of competence. Remember Michael Scott, the boss on the sitcom The Office, who touts his comedic chops while braying sexist, racist, and just-plain-stupid jokes? (If you found yourself laughing with him rather than at him, you might want to consider another line of work.)

Leaders who favor a teasing style (i.e., saying whatever amuses them without worrying how it affects others, or using humorous sparring as a way to build relationships) can alienate those with less leathery hides. An alternative is what Bagdonas calls "uplifting humor, where the target is more often themselves or a common enemy." That enemy is defined loosely and "can be as benign as the expense management system at your company," she says.

Laughter as a tool to disarm

Entrepreneurs, since they start from scratch, are well positioned to develop leadership styles infused with humor and cultures that know how to laugh. But in the crucible of company founding, exhaustion, stress, and existential fear may smother the giggles. To make both the startup experience itself and later stories about the experience more enjoyable, founders should try "reframing" it from "a dramatic or tragic story to one that is more comedic and lighthearted," says Aaker. The tale of losing your only customer becomes less grim if you can also recount the night you spend consoling yourself by binging on RuPaul's Drag Race.

Pitch perfect

Some people are spontaneously funny, but if you need to write your jokes into your presentations, that's fine, too. And while we tend to think of humor as the province of extroverts who tell colorful stories or do impressions, humor may take different forms for quieter leaders. "These folks love when their humor is unnoticed by many but highly appreciated by a few," says Bagdonas.

Your sense of humor is a muscle: It gets stronger the more you use it. The instructors recommend incorporating levity not just in presentations but also in casual conversations, emails, even your out-of-office reply message. If you're sending out a mundane communication where levity wouldn't be out of place, consider dropping in an amusing comment. When public speaking, reference funny things that happened or jokes made earlier by you or by others. Never punch down by targeting a subordinate.

What makes something funny?

Two presentations at technology conferences in the 1990s exemplify the deployment of humor at its worst and best. In the failed effort, a Nickelodeon executive delivered an unexciting presentation about a major IT project his team had successfully pulled off. He concluded by saying, "And this was the reaction." A screen descended and displayed an interminable clip of Ren and Stimpy doing the "Happy Happy Joy Joy" dance. The audience sat stony-faced.

The successful effort came courtesy of the technology chief at Computer Associates. As he walked onstage a rustling sound rose from the audience: the guy was a dead ringer for the actor Wayne Knight. The presenter stood for a moment, staring down at the podium and shaking his head as though in resignation. They he looked up and said loudly, "Go ahead. Get it out of your system." And the whole audience in unison cried out "Newman!" in a perfect Seinfeldian sneer. After that, they were eating out of his hand.

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