In his home in Shalford, Surrey, named Old Croft, Collins set up a Sequential Prophet-5 synthesiser, piano, Roland CR-78 drum machine, and an 8-track tape machine in his bedroom, and recorded a collection of demos with backing tracks and early lyrics. He was not concerned with the quality of the recordings as what may have lacked in the recordings would have been salvaged with the emotion in the songs. There were numerous times when Collins stopped recording earlier than planned as the ideas were not working in the studio, forcing him to resume the following day. Collins based the majority of Face Value on the divorce he had endured and used a solo album as an outlet for his feelings.
During the conception of the album, Collins had forged a close friendship with John Martyn and played on Grace and Danger (1980), which contained a similar narrative relating to divorce and relationship breakdown. Some of Collins' material that he had written was performed by Genesis on Duke (1980), including "Misunderstanding", the arrangement of which remained unchanged. He had played "In the Air Tonight" and "If Leaving Me is Easy" to the group, but they were left out as Collins said they were "too simple for the band".
The recording sessions for Face Value took place at the Town House in London and the Village Recorder in Los Angeles between August and December 1980. The demos recorded onto 8-track were transferred onto 24-track for overdubs. According to Classic Albums, in what was considered a controversial move at the time, Collins, who grew up listening to American R&B as a child in Chiswick, decided to incorporate an R&B horn section, hiring the Phenix Horns, who played backup for Earth, Wind & Fire. Collins had asked a contact who knew the group if they were interested in playing, and upon their agreement their leader Thomas "Tom Tom 84" Washington met with Collins who asked him to sing the sections where the horns were to be placed into a tape recorder. The group recorded their parts the following day.
Collins produced the album himself with assistance from Hugh Padgham, who would co-produce several of Collins and Genesis's subsequent albums in the 1980s. Initially he considered George Clinton, Maurice White, or Phil Ramone until he realised that he merely wanted someone to endorse his own ideas. Assistant recording engineer Nick Launay was hired after Collins was impressed with his work with Public Image Ltd. Collins was dissatisfied with initial test cuts of the album, describing them like a Queen album, "big, British and upfront". He then listened to several albums by black musicians including ones by the Jacksons and a collection of soul artists in his own collection, and noticed a common link with technician Mike Reese who worked at a Los Angeles mastering lab. Reese prepared a cut which Collins was satisfied with.
The simple style of music on Face Value was attributed by Collins to his fondness for Weather Report's simple melodies and for black music. Collins controversially included drum programming rather than just live drum instrumentation despite his reputation as a drummer. Collins said he wanted to experiment with different sounds and was inspired by the work of his former bandmate Peter Gabriel, who had used drum programming on his last album; Collins was part of these sessions.
The album featured songs of different genres. While technically a rock and pop offering, the basis of many of the tracks lies in R&B with light funk influences, especially in "I'm Not Moving", for which Collins sang his backgrounds with a vocoder. "Droned" and "Hand in Hand" are progressive rock instrumentals, with the first featuring an Indian raga sound, while "Hand in Hand" features jazz elements, a black children's choir from Los Angeles humming the music, and improvisational instrumentation by Collins and the Phenix Horns. "The Roof Is Leaking" has Delta blues and country elements. "Behind the Lines" was originally recorded by Genesis on the Duke album as a progressive rock number. Collins worked up a horn-driven R&B/funk-inspired arrangement after speeding up the tape on the Genesis version and thinking that the sped-up version sounded like a Michael Jackson song. The cover of the Beatles' "Tomorrow Never Knows" includes instruments and vocals playing in reverse while Collins provided multi-layered background vocals and sparse drumming. After the song ends, Collins can be heard quietly singing "Over the Rainbow" in reference to the recent murder of John Lennon; this final song is unlisted on most releases of the album.

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