Am I supposed to 'grind'?

[ChrisG]

No, i think you can't have many knights or sergeants.

Of course it depends on the experience you gain but then again the number of knights and sergeants is limited.

You can upgrade not only the type but also the number of men in the unit,
the primary/secondary weapon,morale and initiative of the unit.

So you can have a unit of irregular swordsmen with the abilities of sergeants for example.