New Morale System
Morale represents the ability and willingness of the troops in a party to summon up the endurance, bravery, and discipline they need to face the stresses of battle and the march. It is not the same thing as the troops' happiness. Elite troops may grumble and whine about the hardships of campaigning -- but then stand together as one when the arrows start to fly. On the other hand, a commander who gives his men everything they want may find that they grow soft, and waiver before the enemy's charge.
Morale's greatest impact is on a party's behaviour in battle, determining how aggressively troops engage the enemy, and how likely they are to break and run if they perceive the tide of battle turning against them. Morale also affects a party's march speed, as a less motivated party will move more slowly, as the men are not pushing themselves to their physical limit, and pause more frequently, as it waits for stragglers to catch up. Finally, a party with very low morale will start to suffer desertions.
Some factors that affect morale are intuitive. For example, a charismatic commander with a reputation for winning battles can infuse his or her men with a sense of confidence. Leaders who give their men well ample and varied supplies of food, and pay them on time, demonstrate that they care about their troops' welfare, and are less likely to lead them into disaster.
Other factors are less intuitive -- particularly those related to a party's sense of group cohesion. In a small tight-knit party, for example, men will often fight hard against daunting odds to avoid showing cowardice before their comrades-in-arms. A large party on the other hand may see its cohesion strained, as the commander has less time to supervise the men, listen to their grievances, and resolve their disputes. Frequent battles will strengthen the bonds between men, while long periods without combat will see the troops become bored and quarrelsome.
The morale report, accessibly by hitting the 'reports' button will give the player a sense of the factors affecting his or her men's morale.