"He's regarded in the industry as one of the top coaches in the game, if not the top coach," Holland told MLive.com. "He's in the prime of his career. Our hope is that Mike wants to stay, but he's positioned himself to have the option to explore."
Babcock has led the Red Wings to the Stanley Cup Playoffs in each of his 10 seasons in Detroit, but his contract expires June 30. Detroit has lost five of its past six playoff series and hasn't advanced past the second round since 2009.
The Red Wings would like to sign Babcock to a long-term contract before his current one expires, but Holland said there is no timetable for when Babcock will make his decision.
"There's an element of urgency, but not hours or days," Holland said. "Probably in the month of May."