Why do we care about humor? Because it works. And in a world where 83 percent of Americans feel stressed at work, 55 percent of Americans are unsatisfied with their jobs, and 47 percent of Americans struggle to stay happy, something has to change.

What’s at stake? Close to a trillion dollars in lost productivity and increased costs. The national employee engagement rate currently hovers around 30 percent. Each year, U.S. companies lose an estimated:

• $300 billion due to stressed workers

• $500 billion due to disengaged employees

• $11 billion due to employee turnover.

Being happy at work is important. Studies suggest that if you’re not happy at work, you’re less productive, more likely to take sick days, and likely to become a poor problem solver. Still, some people maintain being happy at work isn’t important—that happiness is just one possible by-product of a good working environment and not worth being its own goal. I think, however, this comes from a fundamental misunderstanding of how happiness can benefit us.

Too often we feel that if we are laughing during work, people may think we are "slacking off." Professor Sophie Scott from University College London, however, says, “Laughter is a subconscious signal that we’re in a state of relaxation and safety.” Studies show that humor in the workplace can boost employee productivity and even enhance performance. A Wharton study found that laughter promotes creativity and greater analytical precision. So, not only are your employees inspired to perform, they perform better.

Laughter is also one of the best stress management tools. As the Mayo Clinic reports, more giggles are just what the doctor ordered because laughter increases the release of feel-good chemicals, reduces tension, and helps us connect with others.

How Humor Helps

• Humor beats stress. Chronic stress can cause muscle tension, high blood pressure, and decreased immunity. Humor can counteract these negative effects. Studies have shown that laughter can relax muscles, decrease blood pressure, and improve our immune system.

• Humor engages employees. Disengaged employees cost companies billions of dollars in lost productivity through absenteeism, presenteeism, and ineffective results. Managers who use humor benefit from high levels of employee engagement and work performance, not just for their direct reports but for themselves.

• Humor reduces turnover. The estimated cost to replace an employee ranges from 20 to 150 percent of that person’s annual salary and effects the entire department. Employees who work in a humorous organization report higher workplace satisfaction scores and say they are less likely to leave their roles.

• Humor connects us with others. Positive sounds, such as laughter or a triumphant “woo-hoo!” can trigger a response in the listener’s brain. The response is automatic and helps us interact socially by priming us to smile or laugh, thereby connecting us with the other person.

• Humor reduces status differentials. Humor can help to reduce the social distance between managers and employees.

• Humor diffuses conflict. Humor has long been seen as the great equalizer—a means to facilitate conversation and bridge differences. In fact, humor has been identified as a key factor in peace-building and international mediation.

• Humor builds trust. Social benefits of humor include group cohesiveness, reduction of status differentials, diffusion of conflict, and team and trust building among diverse groups.

• Humor encourages people to work together. A growing body of research shows that when you share a laugh with someone, you’re mirroring not only one another’s body language but also the hormonal and neuronal activity, prompting a mutual investment in each other’s well-being.

If you decide you want to add more laughter and smiles to your work environment, the next thing to consider is how you use humor without offending or getting in trouble. The answer is to keep your jokes within these rules:

• Stay away from religion and politics.

• Don't make sexual references—ever.

• Do not make fun of any clients, competitors, or individuals.

• Never be malicious with your material.