What word would you use for something someone believes is true, even if it isn't? I'm having a really hard time imagining what's wrong with the word "belief" here, to talk about the state of someone's mental expectations of the world.
Racist people don't magically become unbiased in the workplace.
People can and do change, and most of them can compartmentalize in the mean time. "Racist" is not a fundamental, unchangeable attribute of a person, and it's too easy to scope creep once you've got the weapon of ostracism and censorship ready at hand. No matter how wrong they are, we can't just permanently deny people access to jobs and public life. That makes them martyrs.