Meeting changing organizational needs

I have what I thought was a rather simple question. Since I can't find answers anywhere, I am guessing it's not as simple as I thought. I have been a manager in my current position for about 2 yrs. Prior to my coming to my organization, the department performance (and expectations) were very low, and employees we generally rated a "successful" based on low expectations. Since coming on-board I've hired two employees, both of whom exceed *my* expectations which means performing light years beyond the organization's expectations. As a philosophy, I think employees are (or should be) expected to meet the changing needs of an organization. However, in the real world, I'm wondering if this is in fact realistic. My dilemma is this; as I see it, the expectations of the department are evolving and those employees who have been there for years under lesser-demanding regimes have to step it up. On the other hand, I'm wondering if it's fair for me to raise the bar (of expectations) for staff who were told they were doing fine for years, even though bases on my standards are performing at a sub-par level. Since seeing the increased output from my departments' (star performers), the organization is raising it's expectations. Unfortunately, it is only the two stars that can do the higher level work. That's raising the demands on them, while the others perform at the same level as they always have. I've been trying to coach them, train them, and motivate them, but I am beginning to believe they are either unwilling or unable to meet the performance I expect. The question I have is - is it fair for the expectations for employees to change based on a new manager or evolving organizational needs? Again, it seems like a no-brainer to me, but then when it comes to implementation, I feel a little guitly at the thought of having to fire someone when until now, they were told they were doing ok (not great, but ok). Thanks all, Port107