This study aimed to provide new insights for diversity management by applying the psychodynamic principles of defence mechanisms and basic assumption mentality. Diversity is an important part of modern society and organisations. However, the evidence of diversity management remains inconsistent. Two opposing social theories have primarily been the focus of the scientific literature. Some scholars argue that these theories may be insufficient as they do not necessarily account for more covert forms of discrimination and experiences. We adopt a psychodynamic perspective because it has long promoted the influence of covert behaviours and subjective experiences. Ten participants were recruited using the purposeful sampling method. Participants identified as either being White, Black, Asian, or Other which was one of the three main inclusion criteria. The second being participants had no formal managerial authority and all worked in racially diverse teams in different organisations. Participants were recruited from organisations in The UK, The Netherlands, Belgium, Austria, and Australia. Individual interviews lasted 20–30 minutes and were conducted using Microsoft Teams and transcripts were coded using Nvivo 12. Interpretative phenomenological analysis (IPA) was applied to uncover themes and psychodynamic principles were applied to make sense of participants lived experiences. The findings suggest that participants’ anxieties were exacerbated by socio-environmental factors and adverse workplace experiences that negatively interfered with job performance and relationships in the workplace. Ethnic minorities reported more stressors primarily due to a conflict and discrepancy between the self and their work environment. Reducing uncertainty, leadership emotional competence, and effectively managing work boundaries were protective factors. Recommendations and limitations are discussed.