Prisoners can become servants if you increase their opinion of you. you do that by assigning them to your cuddle lounge. Generally the more servants you have assigned to cuddle your prisoners the faster their opinion of you increases. also having management assigned to your summit will also increase the rate. after a time they turn loyal to you and you can assign them to your party or if you wish you can make them work in your facilities. and yes, this works on every, if not all people you capture, including mini bosses/dragons, etc. (Haven't experimented on the bosses yet though)