What are references and why do you need them?

At some point in your search, usually towards the end of an interview process, you may be asked to give a prospective employer some references. You will want to be well prepared for this before the situation arises. You need to compile a reference database.
What are potential employers looking for?
1. Resume distortion. It is estimated that 50 percent of all resumes contain deliberate distortions. One detected misstatement can disqualify you, so do not be dishonest or stretch the truth.
2. Legal protection. No one wants to hire an employee who turns out to have a violent history, criminal background, serious credit problems, or other problems that may cause harm or distress to colleagues or customers. This could turn out to be much more than simply a bad hire- the company could become a target of a lawsuit.
3. Improved hit rate. Hiring managers are experiencing increasing pressure to hire only those people who can make an immediate contribution. Since nearly all employers believe that past performance is an indicator of future performance, there is keen interest in exploring the accuracy of claimed accomplishments.
4. Psychological fit. Hiring managers know that whether you fit in or not depends on your beliefs about work, your personality, style, behavior under pressure, flexibility and speed in adapting to their culture and environment.
5. Opportunity to read between the lines. A skilled interviewer is able to get beyond what is said to what is meant. Often what references omit is as important as what is actually said. Many experienced reference checkers have an excellent intuitive sense that allows them to pick up subtleties that provide critical information.