First, they should increase all stats to allow for more slight bonuses/penalties and evolution. Also, here is how morale and experience could be worked in.
Experience is a filter of sorts to determine when Elites are needed and when they are not. Any Attack would have a minimum experience value. If the unit attacking was below that experience, they would experience a penalty.
Morale is partially increased by experience, but other factors affect it more. The main purpose is slight modification of attack/defense stats for good or bad morale.
-One of these would be 'Local Momentum'. This means that if you have been attcking in the area with heavy losses and little gained ground, you will feel like your in a standstill and start to lose morale. If you many but gain much and push back the enemy, you will start to feel bad over prolonged periods, but short offensives of this kind are okay. If you manage ot breakthrough with some or few losses, your morale will be sky high.
Also, if you manage to hold aganist an enemy in a meat-grinder, your morale will drop, but not as much as the enemy. If you hold the enemy with much better ratio, you'll have good morael that eventually becomes decent. If you start being pushed back or loss a lot of ground, your morale will drop.
-'Positioning' is the situation of your army compared to the enemies in the area. Being surrounded will quickly bring down spirits. Being flanked also is demoralizing. Doing the same to the enemy will bring your troops a good feeling. Being in the low ground is never morale boosting, althoguh the effects are less if its wooded. Open ground is always bad unless you are mobile. Havng the high ground raises confidence.
-'Tactical Confidence' is how much a certain offensive action seems survivable. Attacking across rivers and into fortifications and cities for non-elites or breaching units is demoralizing. Attacking into an open field from less open terrain rasies spirits. Attacking with artillery support raises confidence.
The effect is that local action is important, so you may be losing overall but manage to pull soemthing through in a critical area. Also, this rewards daring offensive and defensive strategies, since you may be able to turn what looked like a messy operation into a clean sweep.