No, your example is fine. But "pleases" like that is slightly formal, and in everyday conversation people would be more likely say, "My father likes my sister's singing". (There is one little tricky bit, though. That example means is that he likes the singing in the way she does it. You can also say something like "My father likes to hear my sister singing", and in that case (not possessive this time, and "singing" is not so much a gerund but a participle), the emphasis is on your father being aware of your sister through her singing and enjoying that.)

This structure is used frequently in daily conversation. We say things like, "My mother's nagging drives me crazy." "My boyfriend's kissing is very nice." It is very common.