When should CEOs use humour?

“Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can’t believe it.”

Elon Musk issued this statement on April Fool’s Day in 2018. It may have been an obvious attempt at humour, but not everyone saw the funny side, especially as there had been several bleak reports by analysts.

As a result, Tesla shares plunged by almost seven per cent. Musk ended up with egg on his face.

It is tempting to leap to the conclusion that CEOs should steer clear of comedy. But that would be a tragic mistake.

Not only would the world lose out on a few great laughs, but under the right circumstances, humour can be quite effective.

More than 500 people responded to a survey I ran on LinkedIn, 89 per cent of whom said that CEOs should make jokes.

There is plenty of empirical evidence to suggest that humour is a great vehicle to communicate new ideas, point out logical discrepancies, or address sensitive issues by opening the minds of the audience.

The big question is how – and when – should bosses use humour. Here are three lessons.

1 Make fun of yourself

Leaders can easily become slightly detached from their organisations. Most staff tend to tell the CEO what they think they want to hear, rather than the truth.

But those in the C-suite need to be connected if they want to pick up new ideas. Likewise, their own next big initiative will only fly if it fits with the ambitions of those working on the operational front line.

Self-deprecating humour helps to humanise those corporate gods and build a connection with their staff.

This is vitally important, as those workers are more likely to be more forthcoming with their boss if they think their boss can handle the truth.

Richard Branson, the founder of Virgin, has always been good at that. After losing a bet, he shaved his legs and served drinks on a rival airline.

Stunts like this resonated with the British public and helped maintain his image as a 'man of the people' rather than a detached billionaire.

There are two key rules when using self-deprecating humour. First, it needs to be authentic.

I’m a big fan of the South African comedian Trevor Noah, best known for his time hosting The Daily Show in the US. He is a master of using humour to draw attention to the issues he cares about, while simultaneously poking fun at himself.

For example, he jokes about his multicultural identity and the perceptions of others in a disarmingly self-deprecating way.

“When I’m in America, people say I sound British,” he said. “When I’m in Britain, people say I sound American. When I’m in South Africa, people say I sound rich.”

Jokes – even self-deprecating humour – need to be appropriately timed. A light-hearted comment does not work during a time of crisis and you don’t want to come across as phony.

Don’t make the same mistake as Ted Cruz, who sparked a backlash when he tried to make light of an ill-timed trip to Cancun during a blackout in Texas, telling a Republican conference: “God bless CPAC. I gotta say, Orlando is awesome. It’s not as nice as Cancun, but it’s nice.”

2 Be careful who you tease

“Just as you’re rising to middle management, your kids need you because they’re teenagers, they need you for the teenage years, and that’s the time your husband becomes a teenager, too,” joked Pepsi CEO Indra Nooyi as she discussed the challenges of career and motherhood.

Friendly teasing can have a similar humanising effect as poking fun at yourself. But be careful who you target.

A good rule of thumb is not to ‘punch downwards’. Pick someone who is your equal or higher on the ladder of privilege and prestige.

Your spouse might seem fair game, but it’s hard to imagine that Nooyi’s joke would have been received the same way if it had been a man making fun of his wife.

Regardless of the intention, such jokes frequently come across as sexist, playing to old stereotypes, and are best avoided.

Teasing between rivals can be an effective way to stay in the limelight. Elon Musk and Jeff Bezos have done this successfully in their space race.

For example, when SpaceX landed its Falcon 9 rocket on a drone ship at sea, Musk tweeted: “If this works, I’m treating myself to a volcano lair. It’s time.”

As well as playing into popular depictions of supervillains, it was also a subtle dig at Bezos and his decision to spend $42 million building a 10,000-year clock inside a mountain in Texas.

3 Avoid mocking others

Mockery may work for comedians but most, like Noah, are actually pretty selective about whom they mock. One of his favourite targets is Donald Trump.

“Donald Trump is basically what would happen if the internet became a person,” he joked on The Daily Show.

Trump himself is the undisputed master of mockery. His insulting nicknames have proved particularly sticky. Remember “Crooked Hillary” for Hillary Clinton, “Lyin’ Ted” for Ted Cruz, “Low Energy Jeb” for Jeb Bush, and “Mini Mike” for Michael Bloomberg.

However, his approach is highly divisive and while it may energise his core supporters, it simultaneously alienates many voters who are offended by his crass behavior. One nickname which proved particularly controversial was “Pocahontas” for Elizabeth Warren, where he mocked her claim of Native American ancestry.

In a polarised political landscape Trump’s approach might work, but it is difficult to see it yielding similar benefits in a corporate setting.

For example, James Dimon, CEO of JP Morgan, regretted his 2021 joke that: “The Communist Party is celebrating its 100th year. So is JP Morgan. And I’ll make a bet we last longer.”

Unsurprisingly, the taunt was not well received in China and Dimon had to embark on an apology tour.

So follow Noah’s example and think very carefully whether you really want to go down the mocking route.

CEOs should not be afraid to make jokes. Humour is a valuable tool for overcoming division, which is good for innovation and strategy implementation. However, leaders will face scrutiny for what they say.

They need to take care not to be misunderstood, or they may find the joke is on them. Self-deprecating humour that does not appear fake or phoney is usually a safe choice.

Further reading:

Three ways to keep staff engaged at work

Seven key competencies for collaborative leadership

Power behind the throne: How are CEOs influenced by their spouse?

Five steps to harness adaptive leadership in turbulent times

Christian Stadler is Professor of Strategic Management at Warwick Business School. He teaches Strategic Advantage and Strategy and Practice for the Executive MBA and Global Online MBA. He is a regular contributor for Forbes.

Learn more about Leading People Through Change and Disruption with a four-day Executive Education programme at WBS London at The Shard.

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