In order to properly understand this mitzvah, Rav Wolbe cites the sefer Sha'arei Teshuva. Rabbeinu Yonah writes (Sha'ar 3, 60) that it is forbidden for one to forcibly cause another Jew to perform grueling work. Moreover, it is even forbidden to ask another Jew to merely heat up some water or buy a loaf of bread, if the situation is such that the person petitioned cannot bring himself to refuse. Nevertheless, when there is a Jewish servant who does not act appropriately, it is permitted to command this Jew to perform whatever one wishes. Why is such servitude validated? The answer is because when one serves another person, there is complete submission to the master. This submission allows the servant to learn a proper mode of behavior from the master and thereby improve his conduct.
We also find this concept elsewhere in the Torah. The Torah relates that although Sarah did not merit having children for many years, Hagar became pregnant immediately after marrying Avraham Avinu. Hagar began acting improperly toward Sarah, and thereafter, we are told that Sarah dealt with her harshly. What was Sarah trying to accomplish? She was trying to cause Hagar to submit herself, and thereby improve her conduct.
It is for this reason that the Torah forbids us from freeing our slaves. When a Canaanite slave serves a Jew, he learns the proper mode of conduct. After Cham acted inappropriately, Noach cursed him that his descendants would become slaves to Bnei Yisroel. Through their service of Jew masters, they would be able to improve their behavior.
This concept is not limited to a master-servant relationship. In previous generations there were Rabbeim who dealt very harshly with their closest disciples. The purpose was to obtain similar results. Through the disciple's complete submission, he would have the ability to achieve a higher spiritual level. This is a lesson for all of us. Complete submission to our Torah leaders can achieve some of the greatest levels of character improvement.