There are two possible scenarios for adding or editing the employee's department.
If you don't have any pre-defined departments in the select box, then you can create a new department. Click on your name on the top right corner and go to the 'Settings' page.
In Settings, go to 'Manage Employees' and then click on 'Add Employees'
Fill in the required details in the pop-up. To create a new department, start typing in the Department text box and automatically a new department option will be created below.
Click on it and you've added a new department. Here's a gif to help you understand better.
Here, you can add new as well as edit existing departments. First go to 'Settings, then 'Manage Employees'.
Click on 'Import CSV' which is on the top right corner.
As you click on it, a Guide to upload the CSV file will appear. Follow the steps mentioned in it and ensure that the guidelines are properly followed.
Thus, if you had added new department in the CSV files. And, if you had edited existing departments by importing CSV, they will be updated as well.
You can review the steps to edit department in this gif: