petedc

Awesome, thanks for pointing me in the right direction! Final code if it helps anyone:

function dc_show_staff(){

    $parent_terms = get_terms( 'staff_department', array( 'parent' => 0 ));

    foreach ( $parent_terms as $parent_term ) {

        $output .= '<h3>'.$parent_term->name.'</h3>';

        $child_terms = get_terms( 'staff_department', array( 'parent' => $parent_term->term_id ));

        foreach ( $child_terms as $child_term ) {
            $args = array(
                    'orderby'   => 'title',
                    'order'     => 'ASC',
                    'post_per_page' => -1,
                    'hide_empty' => 0,
                    'tax_query'   => array(
                                    array(
                                      'taxonomy' => 'staff_department' ,
                                      'field' => 'slug',
                                      'terms' => $child_term->slug,
                                      'include_children' => 1
                                    )),
                    );       

            $term_posts = new WP_Query( $args );
            $term_name = $child_term->name;

            while( $term_posts->have_posts() ) {
                $term_posts->the_post();

                if ( $term_name ) {
                    $output .= '<h3>'.$term_name.'</h3><div class="row">';
                    $term_name = '';
                }

                $output .= '<div class="col-sm-2 staff-item">';
                $output .= '<a href="' . get_permalink() . '">' .get_the_post_thumbnail($post->ID , 'thumbnail', 'class=img img-circle img-responsive'). '</a>';
                $output .= '<a href="'.get_permalink().'">'.get_the_title().'</a>';
                $output .= get_post_meta($post->ID, 'job_title', true);
                $output .= '</div>';
            }

            if ( !$term_name ) {
              $output .= '</div>';
            }
        }
    }
    wp_reset_postdata();
    wp_reset_query();

    return $output;
}