[DataContract]
    public class Employee
    {
        [DataMember]
        public string Name { get; set; }

        [DataMember]
        public Employee Manager { get; set; }
    }

[DataContract]
    public class Department
    {
        [DataMember]
        public string DeptName { get; set; }

        [DataMember]
        public List<Employee> Staff { get; set; }
    }

  [ServiceContract]
    public interface IDepartmentService
    {
        [OperationContract]
        Department GetOneDepartment();
    }

public class DepartmentService : IDepartmentService
    {
        public Department GetOneDepartment()
        {
            List<Employee> listOfEmployees = new List<Employee>();

              var masoud = new Employee() { Name = "Masoud" };
              var saeed = new Employee() { Name = "Saeed", Manager = masoud };
              var peyman = new Employee() { Name = "Peyman", Manager = saeed };
              var mostafa = new Employee() { Name = "Mostafa", Manager = saeed };

              return new Department() { DeptName = "IT", Staff = new List<Employee>() { masoud, saeed, peyman, mostafa } };
        }
    }

 class Program
    {
        static void Main( string[] args )
        {
            DepartmentServiceClient client = new DepartmentServiceClient();

            var result = client.GetOneDepartment();
            WriteDataToFile( result );

            Console.ReadKey();
        }

        private static void WriteDataToFile( Department data )
        {
            DataContractSerializer dcs = new DataContractSerializer( typeof( Department ) );
            var ms = new MemoryStream();
            dcs.WriteObject( ms, data );
            ms.Seek( 0, SeekOrigin.Begin );
            var sr = new StreamReader( ms );
            var xml = sr.ReadToEnd();
            string filePath = @"d:\\data.xml";
            if ( !File.Exists( filePath ) )
            {
                File.Create( filePath );
            }         
                using ( TextWriter writer = new StreamWriter( filePath ) )
                {
                    writer.Write( xml );
                }                      
        }

<Department xmlns="http://schemas.datacontract.org/2004/07/Service" xmlns:i="http://www.w3.org/2001/XMLSchema-instance">
  <Name>IT</Name>
  <Staff>
    <Employee>
      <Manager i:nil="true"/>
      <Name>Masoud</Name>
    </Employee>
    <Employee>
      <Manager>
        <Manager i:nil="true"/>
        <Name>Masoud</Name>
      </Manager>
      <Name>Saeed</Name>
    </Employee>
    <Employee>
      <Manager>
        <Manager>
          <Manager i:nil="true"/>
          <Name>Masoud</Name>
        </Manager>
        <Name>Saeed</Name>
      </Manager>
      <Name>Peyman</Name>
    </Employee>
    <Employee>
      <Manager>
        <Manager>
          <Manager i:nil="true"/>
          <Name>Masoud</Name>
        </Manager>
        <Name>Saeed</Name>
      </Manager>
      <Name>Mostafa</Name>
    </Employee>
  </Staff>
</Department>

<Department xmlns="http://schemas.datacontract.org/2004/07/Service" xmlns:i="http://www.w3.org/2001/XMLSchema-instance">
  <Name>IT</Name>
  <Staff>
    <Employee z:Id="i1" xmlns:z="http://schemas.microsoft.com/2003/10/Serialization/">
      <Manager i:nil="true"/>
      <Name>Masoud</Name>
    </Employee>
    <Employee z:Id="i2" xmlns:z="http://schemas.microsoft.com/2003/10/Serialization/">
      <Manager z:Ref="i1"/>
      <Name>Saeed</Name>
    </Employee>
    <Employee z:Id="i3" xmlns:z="http://schemas.microsoft.com/2003/10/Serialization/">
      <Manager z:Ref="i2"/>
      <Name>Peyman</Name>
    </Employee>
    <Employee z:Id="i4" xmlns:z="http://schemas.microsoft.com/2003/10/Serialization/">
      <Manager z:Ref="i2"/>
      <Name>Mostafa</Name>
    </Employee>
  </Staff>
</Department>