Now I see that I need to perform VM Hardware upgrade to match my host?
You don't, strictly speaking, need to do so, but you can.
Is this relatively safe to do?
My policy has always been to not upgrade to the bleeding edge virtual hardware version unless you have a very specific need and use case for one of the features it enables. This is because, almost always, issues that crop up with regard to virtual hardware are almost always with the latest version for the host. Don't expose yourself to risk unnecessarily.
If you have Intel Skylake CPU dont upgrade the VCSA to vHW13 or up because it will break (SSO). We had a hard time to figured this out together with GSS.
We upgrade Windows based VMs very early to the latest vHW. The linux stuff we normaly test because we have different distribution all over the place. What not every one knows is that VMware hardcoded that existing CPU features into the vHW. So if you have Code which can leverage the latest CPU features you need to upgrade the vHW.
OK, thank you. I have Sandy Bridge EP class processors -
Intel® Xeon® Processor E5-2620
15M Cache, 2.00 GHz, 7.20 GT/s Intel® QPI.