USC Chairman Learned Flights of a Bumblebee : Scharffenberger Finds His Busy Life Keeps Him Airborne

Can lessons about life be learned in a childhood hobby?

The answer is emphatically affirmative, if you take note of the life of George T. Scharffenberger, the recently elected chairman of the University of Southern California’s board of trustees and an internationally known businessman and financier.

What he observed, as a youngster raising bees, is that “their efforts are disciplined and cooperative. No bee wanders off aimlessly on its own.

“On a hot day, for example, when a hive needs to be cooled down, the bees work together as ventilators. One group of bees uses its wings to push air into one side of the hive, while another group pulls the air out the other side, to achieve a cooling effect.

Persist to a Goal

“And bees persist to a goal. They never stop.

“In human efforts, I think these characteristics win the day. I’m not an advocate of mindless discipline or blind cooperation or persistence to the point of unpleasantness. But if one takes a sensible approach. . . .”

The sentence trails off wistfully. Scharffenberger does not claim that his own approach has been invariably sensible--indeed, with uncommon candor, he is quick to tell that while deeply devoted to his family, he has never been satisfied with his performance as a parent, and that his preoccupation with business often left his wife, Marion, with the burden of being both father and mother to the Scharffenbergers’ six children.

At the same time his personal adventures indicate that he learned other key lessons from his boyhood hobby of beekeeping. With a disciplined, cooperative approach, he rose from the depths of the Depression to substantial wealth. And nowhere does the record, or even the not-for-attribution comments of competitors, indicate that during his persistent climb he resorted to unpleasantness.

Tall and slim at 66, with a still-boyish gleam in his light blue eyes, Scharffenberger tends to express himself with gentle understatement and with an undercurrent of quiet, self-effacing humor. His outgoing, friendly manner, courtly and empathetic, makes it clear that he enjoys conversation.

Sipping a glass of iced tea as he relaxed on a lounge chair on the brick patio of his sprawling white ranch house, amid a sweep of colorful flowers and eucalyptus trees on the Palos Verdes Peninsula, he spoke recently with a visitor on a variety of subjects.

He disclaimed the ability “to be a philosopher,” but his observations ranged insightfully from family life (and the parental learning process) to the humanistic aspects of business (and the motivation of executives) to higher education. (In addition to chairing USC’s board of trustees, a post for which only dedicated philanthropists are sought, he is also a director of Georgetown University in Washington, D.C.)

He divides his time between a home in Southern California--where, among other activities, he continues to tend bees--and an apartment in Manhattan where he keeps a close involvement in the world of business.

Marion Scharffenberger balances her time between traveling with her husband--their six children are grown--and her devotion to a number of charities, including The Colleagues and the Peninsula Committee of Childrens Hospital.

George began raising bees during boyhood on Long Island. His father’s death in 1930 thrust the 11-year-old into a man’s world; in addition to holding down odd jobs while he went to school, he took charge of all the repairs required around the house, including electrical wiring, plumbing and carpentry.

The approach, he said recently, was less creatively inspired than essential. “The bank didn’t want our house; it had plenty of foreclosures on its hands. So we--my mother and younger brother and I--were fortunate enough to have a place to live. But the house was old and there was always something in need of fixing: more power in the electrical circuits, replacement of water pipes. I simply had to learn to do it all, and I still know how to do it, although to this day carpentry--or getting two pieces of wood to match perfectly--is not one of my claims to fame.”

The insecurities of hard times produced varying effects, Scharffenberger said. “The lack of money seemed to develop the introspective side of my nature, so much so that my Latin teacher told me, ‘Obviously you’re not very aggressive, you’re not for the business world, you should think of teaching for a career.’

“But the lack of money also led to sleepless nights, wondering how to get the money to buy food. One week we had only string beans--that was our total dinner every night. To this day I’m not terribly fond of string beans. But such experiences became a propulsion to do something.

“When I was 12, I read an ad that claimed you could make money raising bees. So I took up beekeeping.

“Parenthetically, let me say: you know how kids like to hear their parents’ stories about what happened during the Depression? Some 38 years later I told our kids about the experience.

“Then Marion and I took a trip to Rio and while we were away, the kids decided to surprise me. Or maybe they were just testing me to see if I’d made up the story. They went to Sears and bought a beekeeping kit and assembled it. Then they put some 10,000 bees in a cage in a powder room and waited for us to come home.

Tremendous Scream

“When Marion opened the door to the powder room she let out a tremendous scream that could have been heard from Palos Verdes to Santa Barbara.

“Anyway, I gathered up the bees and installed them in outside facilities and now we produce as much as 600 pounds of honey every year, which we put in jars and give away to friends and neighbors.”

George Scharffenberger’s parents had both been accountants and, he said: “I just took it for granted that’s what I would be.” He studied accounting at Columbia University, but when he graduated at 21 he encountered an unexpected problem. “I was extremely immature in appearance. I was interviewed at Price Waterhouse, where instead of hiring me they told me to grow a mustache.”

Undaunted, he persisted in his search and landed a job at another accounting firm, Arthur Anderson & Co. Later he joined an Anderson client, International Telephone & Telegraph. There he rose rapidly and, still in his 20s, was named controller (and, somewhat later, president) of an ITT subsidiary in New Jersey.

At ITT he began dating vivacious, blue-eyed Marion Nelson, a secretary in his department. “It took some persistence on my part,” he said, “because Marion didn’t think it was a good idea to date the boss.”

Married in 1948, Scharffenberger had great expectations for his career until, a decade later, “some members of the ITT board told me that someday I could become president (of the parent company)--but they considered me still too young. I guess I couldn’t grow a mustache even then.”

Litton Industries lured him to Southern California with the offer of a vice presidency. The Scharffenbergers first rented a house in Woodland Hills, then put down stakes on the Palos Verdes Peninsula. After 6 1/2 years at Litton he held the rank of senior vice president but realized that “I was just one of a number of men in third place, waiting in a long line to become top man. I felt great affection and regard for my colleagues, but I was also faced with the prospect of putting six kids through college, and I did not have a great deal of money.”

When City Investing Co., a New York-based real estate firm with annual revenues of $8 million, offered him its presidency with a mission to expand the company, “I told them up front that I knew nothing about acquisitions--it was an area I had nothing to do with at Litton. I don’t think they believed me. They asked me to draw up a program for acquisitions.

Stayed Up Nights

“I learned back in Depression days when you’re compelled to do something, it’s amazing what you can do. I took the job, and I stayed up many a night, trying to figure out what needed to be done and how to do it. It was an immense challenge involving a lot of on-the-job training.

“What helped a lot was my accounting background. I could look at a possible acquisition in terms of its balance sheet, its profit-and-loss statement, and I could see what was needed to make it work.

“The acquisition search was massive. We looked at more than 2,000 companies, seriously considered 200 and finally bought 12, so it was an exhaustive process of winnowing out for quality.”

Over the years, by a process of acquisition followed by internal growth, City Investing expanded from its $8-million base into a $6-billion conglomerate consisting of the Home Insurance Co., the Motel 6 chain, a clutch of mortgage and finance and land-development companies, a builder of shopping centers and, among other ventures, a manufacturer of air conditioners and water heaters.

Commuting often between City Investing’s headquarters in New York, its widely scattered companies and his home in Southern California, Scharffenberger routinely logged about 400,000 miles a year.

The decision to keep his home in Southern California, with his main office in New York, was made carefully. He said: “When we were married, Marion and I agreed that we would attempt to avoid, as far as possible, moves that would be traumatic for a family, especially for children.

“Bear in mind: we had both worked for a company--ITT--that found it necessary to move people around a great deal. Marion and I observed the impact of all that moving on those families, and we made up our minds to stay in one place. At times that meant I was able to fly home only on weekends, but not necessarily every weekend.

“I have to keep very accurate records on this, because taxes are allocated between New York and California, and I know that last year, for example, I spent 45 days here, 127 in New York and 200 somewhere else in the world.”

Some Key Lessons

During his career--first at ITT, then at Litton and most of all at City Investing, where he became chairman and chief executive officer--Scharffenberger learned some key lessons about executive responsibility and about the human side of business.

“It’s important to recognize that your associates are not part of a numbers game, but human beings with motivations and ambitions, which have to be measured. You have to think about where they might go in their careers, and their rewards.

“It’s very pleasant to be the top man and get a lot of money, but if your associates are not well paid, they aren’t going to stay around. At the same time if you make things too easy, you can destroy motivation. So the challenge is to strike a balance.

“It’s no less important to recognize that your associates are human beings with families, and while you need not get involved with their families, you should be sensitive to and alert to the potential of personal problems.”

Deeply devoted to his family, Scharffenberger at the same time is quick to admit that he has never been satisfied with his own performance as a parent. “I’ve done poorly,” he said. “Marion has had to carry the burden of being both the father and mother, because during the years the children were growing up, I was away for long periods of time.

“And that isn’t all of it. There are other needs a parent fills. I’m not much of an athlete, but Marion is. She’s been able to lead the children into different kinds of athletics--tennis, swimming, skiing, horseback riding, basketball, football, golf. Marion has made up for my deficiencies, so we’ve been a good pair.

“Every generation has its own challenges. For Marion and me, it was growing up in the Depression. For our children, it was growing up in a time of drugs and long hair. I don’t mean they got involved with drugs, but certainly the atmosphere reached throughout the environment. I’m rather volatile, and long-haired, bearded children were not exactly my concept of the ideal, and we did have a lot of long-haired, bearded children. At one time I was very out of step with them.

“You might ask whether I ever insisted on having things my own way, but the question gets academic when your ‘little’ boys range in height from 6 feet 4 inches to 6 feet 5 1/2 inches, as mine do. And they are all heavier than I am.

“As a family, we could have fallen apart. But with Marion’s help I came to understand that long hair and beards are not important standards to measure people by, and I learned to look for the real values in the children. So we grew very close again, despite the beards and the long hair. And, I must add, they’ve turned out beautifully.”

Physician to Equestrienne

The children, four sons and two daughters, range in age from 36 to 22, and they include a physician, a landscape architect, a vintner, a writer-editor, a veteran of the Peace Corps, and an equestrienne.

Although scattered geographically, the children and parents keep in touch and reinforce their closeness at regular intervals. “We try to ski as much as we can,” Scharffenberger said. “We have a place at Snowmass (Colorado) and we go there at Christmas. The whole family tries to be there, so it becomes quite a reunion. And we are joined there by friends from the East and West coasts. And of course we look for other opportunities to get together.”

Scharffenberger devoted nearly two decades to the growth and expansion of City Investing, during which the company’s upper echelon of executives became independently wealthy. Last year, the firm embarked on a program of liquidation that will result in a distribution of cash and shares of subsidiaries to the stockholders. Scharffenberger is currently chairman of the largest unit, Home Group Inc., a holding company for Home Insurance Co.

In keeping with his lifelong pattern of busy, persistent and disciplined activity, he continues to lead a bicoastal existence. He centers his financial activities in New York, where he is a board member of Rockefeller Group Inc., of which the principal asset is Rockefeller Center. Separately, he is on the alert for an opportunity to enlarge the horizon of the Home Group and Home Insurance. He also serves on the boards of two major California-based corporations--Northrop, which meets 10 times a year, and Jorgensen Steel--and a Chicago-based diversified company, IC Industries. His business agenda, in addition to his responsibilities at USC, at Georgetown and--not least--a desire to spend time at home, keep him almost routinely airborne.

A USC trustee since 1973, Scharffenberger has headed the trustees’ academic affairs committee since its inception in 1981; the committee is broadly involved in helping the university to achieve a series of ambitious academic goals.

Loves the University

When the possibility of chairing USC’s full board was raised earlier this year, he said: “My reaction was that it was totally inappropriate for someone with my crazy life style to take the job. But in fact I love working for USC. I love everything about the university. It’s important to me to make every possible effort to contribute to education.” Mindful of the need to make that effort, he accepted the chairmanship of the USC board.

But even though he is routinely airborne, Scharffenberger is seldom tempted to be an idle tourist. “Traveling for pleasure is something I do not do if I can help it,” he said. “I accept travel as a necessary part of business life but I’m not a good tourist. I don’t enjoy going to museums. I rarely set out on a trip just for the sake of a trip. I spend an awful lot of time in the air, and when I’m not sleeping, I catch up on reading.”

He has a list of “wish” items on his agenda. “For years I’ve had unfulfilled ambitions about learning Spanish and French. As a 14-year-old, I was on the air with a ham radio and someday I’d like to get back to that. And I’d like to learn to play the piano. But these,” he said with a sigh, “are all items for the future.”

Right now he finds plenty of satisfaction in leading a busy life on both coasts. “I’d love to be here all the time,” he said, “but that wouldn’t work. And I’d love to be there all the time, but that sure wouldn’t work. So, not knowing what to change, I simply make the best of my situation and, really, I thoroughly enjoy all of it.”