If you own the Administrator role, you can manage the workspace departments from the “Settings” option (last item in the menu), by clicking on the “Departments” link.
A new department can be added by clicking the “Add department” button in this page, choosing a department name, a description if needed, and saving the page. You can also see or edit the information about a department form the same screen. The detail view of a department also lists the users assigned to it in the right sidebar.
In case you would like to delete a department, this can be achieved only if it has no projects or users assigned to it. First, reassign all the projects and users to other departments and then click the “Show” button and the “Delete” button.