While victory at Athletic Bilbao eased pressure on the Real coach this week, there remains doubts about Xabi's relationship with the dressing room.
Speaking with José Ramón de la Morena, Sanchez Flores believes Xabi still needs to adjust his system and man-management.
He explained, "I'm watching what Xabi is doing. He needs to rethink his approach.
"I think he dared to take the plunge because he's pure elite. I know him well. He always spoke highly of me as a coach. I like what he does."
The former Atlético Madrid coach also addressed his chances of returning to the touchline: "I'd like to coach again. A year ago I said no, but now I want another opportunity."
