The Northern Irishman parted company with the Rugby Park outfit by mutual consent after a poorer-then-expected league campaign and a string of run-ins with the SFA's disciplinary bosses.
Most of the charges he faced followed on from outspoken comments made in the media but former St Mirren, Aberdeen and Dundee United manager Smith says more needs to be done to ensure bosses know what they can and cannot say in public.
Smith - who is also chairman of Scotland's Managers and Coaching Association - told Press Association Sport: "There is a need for a code of conduct between the clubs, the SFA and the managers.
"When a new manager takes a job, he should agree to a policy on how he is expected to behave in public.
"The game has to be protected so the chairmen must also be responsible to the SFA for any club behaviour and the SFA must be responsible in how they behave. It will protect everyone.
"It won't be an easy document to put in place. We at the Managers and Coaches Association have been having talks about this very matter with the SFA for the past two years but haven't got it agreed yet."
Shiels was banned five times by the SFA. Among his crimes were accusing fourth official Andrew Dallas of "fabricating" evidence after Shiels was dismissed during a match against St Johnstone in November, while his latest four-match ban - two of which were suspended - came after he described Celtic as "the monster of Scottish football".
But Smith says Shiels would have had a better chance of keeping his job had results on the pitch been better. Killie finished ninth in the Clydesdale Bank Premier League despite needing just one win from their final two games before the split to clinch a top-six slot.
Shiels led them to the Scottish League Cup in 2012 after stunning Celtic 1-0 at Hampden but followed that this season by posting the club's worst home record since 1982/83, winning just five of their 19 league matches.
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