Diversity has become a buzzword in organizational discourse, yet its impact in organizations remains complex and multifaceted. In this dissertation, I investigate the role of subjective perceptions of diversity in shaping employees’ individual outcomes in organizations. I theorize that employees' subjective perceptions of diversity positively impact their individual outcomes, even when objective diversity remains constant. However, I also propose that while perceptions of diversity are positively related to employees’ individual outcomes, they are negatively associated with their support for diversity policies. I test these ideas across four studies and find that employees perceptions of diversity are positively associated with their organizational commitment, engagement, and job satisfaction, and negatively associated with their turnover intentions. Furthermore, I find that although perceptions of diversity are positively related to employees’ individual outcomes, they are negatively associated with employees’ support for diversity policies, such that the more diversity employees perceive, the less supportive of diversity policies they are. These results are robust to group membership (i.e., race and gender), group size, and how perceptions of diversity are measured. This research underscores the double-edged sword of diversity and highlights the importance of looking beyond numeric representation when examining the effects of diversity in organizations.