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Avid television viewers might remember an ill-fated Sainsbury's advert from the late 1990s. Featuring John Cleese with a megaphone, it was supposed to impress upon us that Sainsbury's offered Value to shout about. What the company overlooked, however, is that the advert also featured a hapless employee being harangued by Cleese for his incompetence. Sainsbury's workers were up in arms, the advertising agency was 'let go', and the advert was quickly pulled from television screens.

Sainsbury's had forgotten that, when it comes to creating a strong brand, keeping employees onside is more important than clever straplines or even celebrities with megaphones. It is debacles such as this that have made so-called 'employer branding' such a major issue for companies.

Deborah Fernon, organisation and resourcing adviser of the Chartered Institute of Personnel and Development (CIPD), defines an employer's brand as 'a set of attributes and qualities that make an organisation distinctive and attractive to people who feel an affinity with it and deliver their best performance within it.' In practice, this means a company needs to define what makes it unique and communicate that to employees and potential recruits, creating an employer brand that is as attractive as the face the firm presents to the outside world.

'It is all about bottling the spirit of the organisation,' explains Richard Mosley, managing director of consultancy People in Business. 'Employees now have a much wider choice and greater ability to choose. There is a need for companies to differentiate themselves and be clever.'

Mosley's book, The employer brand: bringing the best of brand management to people at work, has become a bible for companies that want to improve their reputation both externally and internally. But branding your company internally is not just a matter of producing nice internal brochures and shiny logos for employee benefits, according to James Roberts from public relations group TCS. 'In practical terms, employer branding means creating a positive and unique employment experience, communicating it consistently internally and externally, and proactively managing your reputation as an employer over time,' he explains.

'Look at how easy it is to apply for jobs, how you treat people when they apply, how your remuneration compares with other that at other companies. What about the physical environment: how do you manage people? What newspapers do you provide in reception? What food is served in the canteen? These issues are as vital to building a positive reputation as your human relations communications. It isn't easy, but when done well, employer branding can deliver significant benefits.'

Good employer branding begins before an employee has even stepped through the doors, says Collette Hill, chief executive of workplace communications consultancy CHA. 'All those who apply to a company and are rejected experience the workplace culture - they are still customers in many cases, so you can't separate workplace culture from an external brand,' she points out.

Selling yourself

Recruitment advertisements are vital when it comes to creating a strong internal brand; they have to give off the right message. If they are at odds with what actually goes on in a company, new recruits will be disappointed and become cynical. Advertisements also have to make the company look like a great place to work.

Christine Rolka, head of internal communications for National Lottery operator Camelot, says being in newspaper lists of good employers, such as the Sunday Times' best 100 companies to work for, can have a huge impact on job applications. 'It really helps with benchmarking, and it should appear in the job advertisements,' she says. 'We have noticed a difference since we started doing this.'

Innocent Drinks, which supplies supermarkets and catering outlets with fruit smoothies, has a particularly strong employer brand that comes through in its recruitment advertisements. The company directs all potential recruits to a video made by one of the founders, and all its job advertisements are written in the same familiar style. For instance, a vacancy for a 'consumer insights specialist' states: 'You must be able to get a fox, a chicken and a bag of grain across a river - all in one piece.'

Innocent's 'people team' says the strong culture is very important to staff. 'We've always wanted to be ourselves and that involves a certain level of silliness. So we have green grass on the floor, lots of trees and umbrellas, and a table football game if anyone fancies a go,' the team explains.

'We encourage people to find out as much as they can about Innocent before they apply. In our job specifications we like to mention some of the exciting things that have happened in the area with the vacancy that's being applied for - maybe our sales figures in the previous year, or some great awards we've won - but we really encourage prospective employees to have a good look at our website and find out about life at Innocent.'

Heather Atchison, head of written communications at consultancy Red Lorry Yellow Lorry, helps firms develop their own 'tone of voice' to attract and retain employees. 'Recruitment ads are really important, because that is how you get the right people through the door,' she says. But she adds that the Innocent approach would not work for everyone: 'Every company has to have its own tone of voice based on its brand identity. British Airways and Virgin are very different, for example. BA is much more established and Virgin more playful. You would not expect them to use the same tone of voice. It depends on the brand.'

No one true voice

Once recruitment advertisements have been addressed, Atchison says human resources departments should look at the letters on their hard discs as an important part of their employer brand. 'HR departments are full of standard letters,' she explains. 'You get sent the same letter whether you leave after six months or six years - that's very poor, so this is an important thing to look at. It is amazing how this makes branding more effective.'

Once an employee has stepped through the door, effective employer branding can help to keep him/her there. Faye Callaghan, head of internal communications at Knight Frank, works in a company with a very different tone of voice from Innocent, but says branding itself to employees is important when it comes to retaining them. 'Our employer brand is very important when it comes to keeping people - the benefits and culture need to reinforce everything the brand implies,' she notes. 'Lots of people work here their whole careers, and we try to give a culture of empowerment and support for those careers.'

Rolka uses internal branding to remind employees about flexible working strategies that can keep them at the company for longer. Camelot markets a Wellbeing programme for existing employees, and emphasises issues such as flexible working, which are important when it comes to retaining staff. 'We brand it with a little Wellbeing logo of a heart and a Camelot star, so people know about it,' Rolka says.

Roberts adds: 'If you have the right people in the right roles who can live the values of your organisation, they are more likely to perform better and stay with you longer.'

Outside view

As well as helping with recruitment and retention, good or bad employer branding has far-reaching consequences outside the workplace. Every employee talks about his or her company when not at the office, and that can change people's perception of the brand. 'When there is a conversation about you in the pub, you want it to be the right conversation,' says Hill.

An organisation that has a reputation for treating employees badly will certainly not enhance its brand, as evidenced by the ill-conceived Sainsbury's advert. On the other hand, using employees well in marketing delivers a message that you are a good employer, and actively improves your image.

High street bank Halifax has used this to advantage by putting employees in its adverts. Some, such as the now famous Howard Brown with his bottle-top glasses, have even become celebrities and helped to create the message that Halifax really values its employees - impressing both them and the outside world.

'Using Howard presented a strong image to employees,' says Mosley. 'But you can screw up - as the Sainsbury's advert shows. HR should be involved in planning advertising campaigns, particularly those involving employees, because people are obviously interested in how they are presented.'

Right people, right place

Several brand experts cite McDonald's and Tesco as particularly strong examples of good employer branding using external advertisements. They credit the same man - David Fairhurst - for the success at both companies.

Having overhauled Tesco's people management , Fairhurst joined McDonald 's in the UK as vice president of people. There he oversaw the 'More than a McJob' campaign, which aimed to change the perception of the firm's career structure externally through advertisements and media coverage. Fairhurst is also responsible for the slogan 'McProspects - over half of our executive team started in our restaurants. Not bad for a McJob'.

McDonald's has had an active campaign promoting employee experience. 'It had a great reputation internally but needed to clear up its image externally,' Mosley notes.

'McDonald's is awesome,' adds Hill. 'Whatever problems it has had externally it has always been fantastic internally. By advertising that fact, it has improved its image.'

Over-familiarity breeds contempt

It may sound easy but consultants are keen to point out that employer branding is not a case of sounding like everyone's best friend. And Rolka says it is easy to get it wrong. 'Employees can spot a mile off if they are being spun a line,' she explains. 'It is not going to help if you are too slick and too glib. If you are a good company to work for, there is no need to ram it down people's throats.'

Paul Middleton, managing director of Yellow Communications, agrees. 'Authenticity is king when it comes to employer branding,' he says. 'Without it, you are dead in the water. Employees can usually tell when you are trying to bullshit them.'

Atchison also believes it is important not to go too far. 'There is a line not to be crossed: you don't want to sound too matey,' she says. 'You are an employer, not the employees' best friend - although you are a human being and you want to sound like one.'

Get the tone of voice right and communicate your message well, and the benefits can be huge, experts agree. That's why a recent survey from the CIPD showed seven out of 10 companies paying attention to their employer brand, with 80 percent believing it would help attract the right people, and 41 percent hoping it would differentiate the company from the competition.

As everyone is keen to point out, however, employer branding won't work unless you have something good to communicate in the first place. 'There's no point telling everyone life at your company is wonderful if it isn't,' says Roberts. 'All that does is build a credibility gap - so no one will believe you in the future.' You have been warned.

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