All in Good Fun Don't be afraid to lighten up--especially if you're the boss.

Before Ranjith Kumaran moved out of his VC firm's incubation space to an office that accommodates his current team of approximately 40 employees, he had acquired a reputation as a boss who cracks jokes--often at his own expense.

The 32-year-old founder of YouSendIt, a Campbell, California, company that lets users quickly send large files over the internet, had taken a mildly embarrassing story of being politely chastised by his investors and turned it into a war story his team could rally around.

"Back then, there were wires running everywhere, and our investors were tripping over them," says Kumaran, whose company projects sales of $10 million for 2008. "In one corner, there were boxes stacked up floor to ceiling. Sometimes they'd have to ask us to clean up our area, which was kind of embarrassing." Kumaran makes light of it now in his brightly painted, couch-filled work space stocked with poker chips and a pingpong table. "We need our younger creatives to feel comfortable, so I tell this story to show them that sometimes it's OK to be the butt of a joke." The entrepreneur believes that using self-effacing humor is a way to create a bond and promote a positive work environment, and he's not alone.

One study published in the 2007 edition of the journal Research in Personnel and Human Resources Management suggests that leaders should take humor very seriously. "Humor is often perceived as something frivolous and even distracting in the workplace. However, our research suggests that humor plays an important role in helping people communicate effectively and in cementing people's attachment to one another," says study co-author Christopher Robert, an assistant professor in the College of Business at the University of Missouri.

Meanwhile, another recent study published in the United Kingdom-based Leadership and Organization Development Journal notes that "social swearing" serves a similar purpose in its ability to build camaraderie.

Are such techniques always appropriate for every workplace? Humor consultant Malcolm Kushner has his doubts about swearing, but he endorses Kumaran's approach. "Some leaders incorrectly think that telling humorous stories like this undermines your authority, but people love it if you poke fun at yourself. It reflects confidence and security and shows people you're not such a taskmaster," says Kushner, whose clients include IBM, Motorola and Sony.