If Beowulf does his best to lead and support his thanes - by, say, spending the experience points he earns on upgrading their weapons rather than his own abilities - they'll gradually become much more effective, self-sufficient fighters, and you'll be able to command more of them at once. They might even sing better songs during the monster-luring minigames. On the other hand, if you run around being brutal and ignoring your thanes, they'll become weaker.
The ultimate example of this attitude is Beowulf's "carnal rage" power, which sends him into a blind, berserker rage that makes him super-powerful, able to rip enemies apart with his bare hands, but it also makes it impossible to distinguish between friend or foe. You run a high risk of snapping a few thanes in half if you activate this, and if you do, they'll come back to haunt Beowulf later on.
