All managers should be making use of individuals' talents, but great managers play a bigger game; they understand the potential of entire teams.
Performance reviews typically look at individuals, but managers are responsible for the output of a team, not the team's components. A great manager needs the skills to manage 'combinations' more than 'people', and the skills to plan for the short term and long term development of these combinations.
Angry Birds taught me to see my employees as a flock
"I picture my team as a flock of birds. We're trying to get eggs (the projects we're working on). There's a bunch of evil green pigs in the way: time consuming screw ups, budget blow outs, shipping problems and other annoying stuff. I have to motivate my team-birds to solve the screw-up pig-problems.
My team has different skill sets. I pair my newbies up with more experienced people, and mix skill sets to solve problems more effectively. To do this I need a really clear idea of what my people are good at - that Steve can do a bunch of things at once, and Helen can clear what's left of a project in record time.
When we kill the pigs, solve the problems (using metaphorical explosive crates and rocks) and meet our targets, we go out for a beer. Another level successfully completed."
Managers need to utilize skills collectively, over time, and understand how strengths and weaknesses work to produce the most effective team. It's about knowing how to mix your red birds with your blue birds.
Businesses are run by teams, large and small. The success or failure of projects (and even the whole business) rests on whether these teams perform well. Looking at the performance of each person is important, but you really need a view of how the whole team works: how the combinations of people work, and which teams out-perform others (and why).