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There is an excellent self-assessment tool for ethical decisions. If a manager has some niggling doubts about a situation that, while she knows it's technically permissible, she's just not so sure it's morally right, she can use the Red Face Test. She simply takes a minute to picture herself explaining her decision in front of her staff, clients or constituents. If she believes she can do that without a red face, her decision is probably OK. Ordinarily, a person with a good moral compass knows in her heart that if she had doubts in the first place, it's probably not the right thing to do, but the Red Face Test can help when the circumstances are particularly sticky - like personnel issues, for instance.
As the elected leader of Alaska, could Gov. Murkowski stand up in front of high school seniors in a civics class and say without so much as a blush that Alaska Republican Party Chairman Randy Ruedrich and Attorney General Gregg Renkes have done absolutely nothing morally wrong and that's why he hasn't fired them? (I am using high school students because it's fairly obvious that the governor's usual audiences aren't too excited about this ethics thing and speaking to them could result in a false negative.)
The Red Face Test requires that he could not engage in any fancy footwork about the law, or policies, or their past performance - just a simple, "Yes, they behaved ethically. I'm proud of both of them and I'll defend Randy and Gregg until my term ends," or, "Nope. What they did was flat out wrong. What was I thinking? Thanks, kids. Who's got a cell phone?"