This is a theoretical paper, which aims to consider the role of strategic human resource management (SHRM) in the development of “gross national happiness” (GNH) in Bhutan. Design/methodology/approach – The paper initially examines the question of what is strategic capacity building and its importance for developing nations. It then considers the story of Bhutan where the idea of GNH forms the development philosophy and approach to attaining the long-term visions and goals for the country. Different models and structures for SHRM in Bhutan are discussed in order to determine whether it can be applied to a nation effectively and, if so, whether it will enable the attainment of GNH and the performance desired by the government. Findings – A link between SHRM and the achievement of Bhutan's 2020 vision is identified as, if Bhutan is to achieve its national capacity, it must identify the capabilities that it needs and then the strategies to support such developments. All four of Ulrich's HRM types will be required and this will need careful management, as there is a tendency to move towards one or other within an organization. Bhutan is going through a period of extensive change and the values will be changing. What is recognized here is that not only must the SHRM develop appropriate people management strategies, it must also acknowledge its crucial role in the recognition and maintenance of appropriate value sets. Research limitations/implications – The proposed framework is currently limited to a theoretical application for Bhutan because, it is argued, that an appropriate model of SHRM will support the desired attainments, but that to do so the specific values of Bhutan will need to be identified and integrated into policy development. Practical implications – The role of SHRM in supporting or driving change is considered and a potential framework for SHRM in Bhutan is proposed. There is potential to apply these ideas more widely. Originality/value – This paper identifies a role for SHRM in the attainment of GNH for Bhutan, which is important in helping Bhutan to achieve its national capability.