You can use OPENXML to parse it like this:
DECLARE @hDoc int, @xml nvarchar(4000)
SELECT @xml = ...
EXECUTE sp_xml_preparedocument @hDoc OUTPUT, @xml
SELECT employee_name
FROM OPENXML(@hDoc, '/employees/employee/')
WITH (employee_name nvarchar(30) '@name')
EXECUTE sp_xml_removedocument @hDoc
-Mike