A little further clarification:
On the Service form the first dropdown will show all Departments..
The second dropdown will list Employees related to that Department who have been flagged as being a Dept. Manager.
Assuming that your calculation field is defined in Staff as it should be, the only reasons that I can see that would keep your calculation from being indexed are:
Indexing is turned off for one of these two fields
One of these two fields have global storage specified.