I believe their should be a simple, but optional, morale system for monsters and NPCs. While it should ultimately be up to the DM, I like having a baseline to use for various monsters because it gives me an idea of how to play them. If a goblin has poor morale, it may fight differently than a hobgoblin with good morale, which will fight differently than a mindless undead monster with no morale.
There should be some easy to use modifiers as well and a simple line about what the creature typically does if it fails its morale check. (organized retreat, surrender, scatter, flee in panic while wetting itself, etc)
Some possible Modifiers:
+4 if defending young/lair/home;
+2 if outnumbering foe by more than 2:1;
+4 if outnumbering foe by more than 5:1;
+1 if led by a strong leader;
+2 if led by a strong & reputable leader (i.e., the goblin war chief who defeated the mighty ogre Grongor and freed his clan from slavery)
-2 if no strong leader present;
-4 if outnumbered by foe;
-2 if more than 25% of number killed/incapacitated in one round
-5 if more than 50% of number killed/incapacitated in total
If you keep it to a d20 scale, you then give most monsters a baseline number, and maybe one additional morale item (i.e., gains +6 for defending lair, instead of the normal +4)
Goblin, Kobold 10
Orc, Gnoll 12
Human, Halfling 13
Hobgoblin 14
Dwarf, Elf 15
Just my opinion.