The executive recruitment agency said that after quoted companies issue their annual report they suffer a 'deluge' of questionnaires and phone calls from institutional investors.

These investors are forcing smaller companies' non-executives to spend far too much time on corporate governance guidelines rather than to helping businesses run better.

'Fund managers are building up a huge industry based on corporate governance,' said Sarah Grnewald of Directorbank. 'They are in danger of losing the plot. If they want to see real growth in their funds, they've got to let the boards concentrate on strategy and delivering profits.'