D7: using a list-based field for views
Using Drupal 101, and assuming that you have one Department page per department, and one Employee page per employee, and assuming that each employee can be associated with more than one department ...

First add a node reference field to the Employee content type (field_department). Set it to reference the Department content type and set the number of values to unlimited.

Then create a view of Content type:Employee.

Add a Relationship on Content:Department (field_department) and make it Required.

Then add a Contextual Filter on Content:NID. Have it use the Relationship you have just created and configure it to Provide Default Value: Content ID from URL when the filter is not available.

Under Advanced > Query Settings check Distinct. This type of query might produce duplicates.

Place the View block on the Department page, and this will restrict the list to employees related to the department currently being viewed.

A similar approach can be used with term reference fields, but you would require two relationships (first to the term, then from the term to the other content type). I cannot speak about the List module as it appears to be discontinued on D.O.