If you want to control your employees in a synchronous fashion, invest in AD now, or regret it later when you are spaghetti stringing a bunch of edits together to get the functionality you want.
That being said, I find the whole blocking thing, especially in small groups, the likes of which doesn't even have a proper domain system set up, to be entirely odd. It will do only one thing, make the coworkers hate you.
In such a small setting, it's easy to see who is performing and who isn't. If they are performing up to the standards the boss sets for them, what is the problem? And if they aren't, why hasn't he found someone else who can?
Blocking websites seems like a terrible bandaid to addressing the real problem. My company (much larger) tried something similar, but once they realised productivity went down, and we had some real talent leave the company in part due to these rules (straw that broke the camels back so to speak), they reversed their decision and just blocked things that could get them in real trouble (porn and file sharing).