You can achieve this by having 2 grids and a dataview.
Use 1 datagrid that contains the departments, have a dataview that listens to your department datagrid and insert your 2nd datagrid in the dataview.
Because the dataview is a view on just 1 department, you are now able to select the reference on the datagrid to the selected department.
I believe you can use a form loader within a grid of department. The form loader can point to the association between department and employees. I also believe you can just nest grids. Have department be the outer grid and employees be the inner grid. Hope that helps.