The anti-discrimination group has also described his 15-month ban for using racist language towards players as a “slap in the face” to his victims.
Yems admitted to one charge and was found guilty of 11 others relating to comments that referenced ethnic origin, colour, race, nationality, religion, belief or gender between 2019 and 2022.
He called black players “Zulu warriors” and referred to an Asian player as a “suicide bomber”.
Four further charges were found to be unproven by an FA tribunal.
The written reasons for Yems' sanctions were published on Tuesday but the independent FA panel agreed the 63-year-old was not a racist and neither did he “ever intend to make racist remarks”.
Kick It Out have issued a strongly worded statement in response to the findings of the independent regulatory commission.
“The discriminatory language outlined in the FA independent panel report is simply shocking,” the Kick It Out have statement read.
“Given the seriousness of the incidents detailed, it is very hard to understand how the FA independent panel have concluded that ‘Mr Yems is not a conscious racist'.
“We do not share that viewpoint. The behaviour outlined in the report must be called out for exactly what it is, racism and Islamophobia.
“To speak plainly, a 15-month ban given the severity of the 11 proven charges is a slap in the face to the victims of the discriminatory abuse detailed in this report and anyone who has been subject to racism or Islamophobia.
“Furthermore, to reduce his prolonged string of offensive, Islamophobic, and racist remarks to simply being ‘misplaced jocularity' shows a total lack of understanding about the damage that this language can cause or the power dynamics that exist in the game.
“This decision also sets a dangerous precedent by allowing perpetrators to hide behind a ‘banter' defence when intentionally using harmful and discriminatory language, and we will be in touch with the FA to understand how the panel came to their conclusion.
“We applaud the courage of the victims of this case for coming forward and would encourage anyone involved in the game who sadly find themselves in similar situations to get in touch with us at Kick It Out.”