Which system version is running on your Mac?
Since macOS 13 Ventura, we can at least sort the people album by the name. If you set the name format in the Contacts > Preferences to "Last name first", the string will keep family members with the same last name together. my close family members have been marked as Favorites and are appearing in the top section of the People album, sorted by the last name.
For the other people in my library - friends, colleagues, team members, project groups, travel companions, am using the following work-around to to be able to find people quickly, based on the group the belong to: For people, that or no family members I am using a prefix in front of the name, showing the project group they belong to, for example the prefix "ARC:", like "ARC: Peter Pan" for the members of our crew during the ARC Rally. This way my People album will be sorted by the names of the projects or teams, when I sort it. When I do this, the people with prefixes in the People album will no longer be linked to their Contact card, so you will not be able to ask SIRI to find photos of them. On the other hand, it will prevent Photos from creating short names for them and drop parts of the name, which I prefer. I want to see the full names for the people that I cannot recognize easily by looking at the picture.
I second your request for folders for the People album. as it is, it is hard to use for a large library with nearly thousand people. You could create your own People album with nested folders, if you create a smart album for each named person. The smart albums can be grouped with folders and sub folders.
- File > New Smart album
- Set the rule to "person is ..."
You will not be able to see your custom people albums on your iPhone or iPad, however, as the seat albums are not synced with iCloud Photos to the mobile devices, only to your other Macs.