This paper studies how social relationships between managers and employees affect the optimal intensity and credibility of relational incentives. We develop a simple principal-agent model allowing both players to have feelings of altruism and/or spite toward each other. We find that the optimal incentive intensity decreases in the employee’s altruism, and eventually reaches zero. Further, the credibility of relational incentives improves in the manager’s altruism because altruism increases the manager’s utility from the relational contract and implies a cost of cheating the agent. We also find that, if social relations are sufficiently good, the principal sometimes wants to hire the agent even if relational incentives are not credible, implying that the agent will shirk.