When an employer wants to hire you, more than likely you’re going to have to provide them with several references from people who can attest to your abilities, strengths, and work history. Obviously, you want to provide a potential employer with people who will give positive feedback about you. Most of your references should be business contacts, and only if needed, social contacts (family or friends).

Below find some great tips about references I found on Virginia Tech’s website which does a nice job of discussing the do’s and dont’s about references:

Who should serve as your references
In selecting people to ask to serve as references for you, think about what those individuals know about you and if they can discuss your work-related qualities.
Past and present employers usually know about such things as your reliability, initiative, quickness to learn and take on responsibility, and your ability to work with others. This type of information is valuable, even if your employment was not career-related.
Faculty members may know about your academic ability, productivity, and timeliness, and perhaps have observed how you work with others.
Advisors and coaches may also be aware of information about you that could be relevant to a potential employer — such as maturity, initiative, interpersonal skills or leadership qualities.
Don’t list references who only know you in a social capacity. While family friends may have nice things to say about you, employers don’t place value on these kinds of references.
Obviously you do not want to offer as a reference someone who would not speak about you in positive terms or who doesn’t know you well enough to give a strong reference. If an individual is neutral or has a reservation about serving as a reference for you, look elsewhere. This is one of the critical reasons for seeking permission from potential references in advance.
Getting permission from your references
DO contact each individual whom you are asking to serve as your reference. Secure his/her permission IN ADVANCE.
DON’T ever give someone’s name as a reference without that person’s permission. It will not advance your cause of becoming employed if a prospective employer calls a person you have listed as a reference, only to find out the reference is surprised to be called. Before you give a name of a reference, make sure that person is comfortable with serving in that capacity. Don’t assume anything.
When you secure permission, verify all details of your references’ contact information, including spelling of names, titles, addresses, phone numbers and email addresses.
Give each person who agrees to serve as a reference for you a copy of your resume (or vita). This lets your references know about your interests, abilities and experiences. A faculty member may know your academic skills and an employer may know your on-the-job characteristics, but each may not be aware of the other facets of your background. Keeping your references well-informed will help them serve as better references for you.
Keep your references posted on your activities and progress. Tell your references the names of persons and organizations to whom you’ve given their names. When possible, give them a copy of the job description for the positions for which you are applying. This helps your references be prepared for phone calls and letters they may receive.
Thank each reference in writing for his/her assistance.
DON’T view communicating with your references as bothering them. Brief, cordial e-mail or phone messages show that you are businesslike about your job search, and that you appreciate your references. Communicating makes it easier for your references to help you.
When to give your reference list to a prospective employer
Provide reference information when you are asked to provide it. If you reach the interview stage and have not been asked for references, you may offer your reference list.
Generally do not mail reference information with your resume unless it has been specifically requested.
Contacting references is time-consuming, and most employers will do some initial screening of candidates — by reviewing resumes and conducting interviews — before contacting references.
For most undergraduates, employers will not be contacting references prior to interviewing you.
Where to list references
On a resume DON’T. It is unnecessary to state “References available upon request” — and is often a waste of valuable space — because most employers assume you can supply references. They expect them on separate page when requested.
On a curriculum vitae DO list references. It is customary practice to include your reference list on this document.
Reference page
DO create a reference page to list your references.
For each reference person, include full name, title, organization with which the person is affiliated, complete address, phone number and email address.
Make absolutely sure you have spelled your references’ names correctly.
Your name and contact information should be at the heading of the page — just like it appears on your resume.
What should references say?
If your references are not sure what to say, refer them to writing reference letters — on the faculty and staff section of our web site — which lists professional resources.
Encourage references to mention:
The capacity in which they know/knew you (i.e., you were a summer intern and she was your supervisor),
Time frame of the relationship (i.e., summer of 1995 or has known the candidate for four years), and
Positive qualities demonstrated in the capacity in which they knew you (i.e., trained other employees, designed floor plans on CAD, and presented proposals to clients).
What about generic letters of recommendation?
An individual might offer to write a generic letter of reference for you, perhaps addressed “To whom it may concern” or something similar. Is this useful?
If a potential employer requires letters of reference with your application (typical for positions in academia, for example), it is preferrable for the reference letter to be written directly to the recipient, rather than a generic “to whom it may concern” letter.
An individualized letter is generally taken more seriously.
However, if you are uncomfortable about asking a reference to write a number of personalized letters, or if your reference will be out of reach (on sabbatical, assignment abroad, etc.) during your job search, a “to whom it may concern letter” could serve your purposes.
Be aware that in general, employers will consult references after screening resumes and interviewing. Some potential employers prefer to call your references and speak directly with them. So while a letter written in advance by your reference, and offered to the employer by you at the time of the interview (along with your reference list), doesn’t hurt, it is not necessary to solicit these.
Legal issues relating to references
Be aware that some employers have a policy of not giving references.  They may confirm dates of employment, but otherwise be unwilling to comment about a former (or current) employee for legal reasons.
This is due to concerns about litigation if there are any negative consequences arising from a reference statement.
Before you assume that a former (or current) employer will serve as a reference for you, ask.
If company policy prohibits a formal reference, consider if you had a supervisor or coworker with higher rank who clearly valued your contributions and work ethic. Perhaps he or she would serve as an informal reference or speak off-the-record on your behalf.
 **Courtesy of Virginia Tech**