ABSTRACT. Presently, many European countries (as well as the Federal State of Saxony/Germany) are facing similar demographic developments that will provoke fundamental changes in the respective labour markets in years to come. This situation will especially affect Small and Medium-Sized Enterprises (SMEs) that are based in rural regions with rapidly increasing numbers of retirees and an equally rapidly shrinking population of young people. The available theoretical approaches of Human Resource Management (HRM) and models are suitable for the conditions in large companies. However, SMEs are not “small” large enterprises, but they have specific characteristics that affect all HRM processes. HR Management varies from one SME to another and depends very much on the regional context. An SME in a metropolitan region needs a different approach to HRM than one in a rural region. The innovative Learning Module that marks the core of the Erasmus project SHARPEN addresses these issues. Students select SMEs in five European rural regions and describe the context of the selected regional SMEs, their internal constraints and, above all, the specific needs of HR Management in these SMEs. On this basis, students apply their theoretical HRM knowledge by modifying HR approaches and models for this selected SME. The innovative teaching methodology of the HR module combines state-of-the-art HR concepts and practical HR work in companies within one learning module. Besides that, the teaching methodology enables regional and cross-cultural cooperation between students, lecturers, SMEs. This is supplemented by learning with up-to-date interactive learning methods, e.g. guided discussions, presentations, teamwork and case study method for students. This paper focuses on the question to what extent this innovative teaching approach can help to solve this HR problem in European SMEs.