Hayes, 33, is weighing up his playing future after a season riddled by injury.
He has overcome his latest calf complaint and will return to face the Gold Coast Suns on Sunday.
"I think he's got a lot to offer, still purely from a playing point of view, certainly from a leadership and mentoring point of view," Watters said on Saturday.
"We have ongoing discussions. We have sort of casually spoken about it seven, eight, nine times this year. We'll get to a landing point soon, and there will probably be an announcement this week."
Click here to read the Saints v Suns match preview
Justin Koschitzke is certain to hang up the boots, and round 23 remains his last chance to break into the senior side and get to game 200.
"It was always going to be tight once he tore his calf," Watters said.
"He's got more volume into his training this week. Again, we're very hopeful as a club to get him across the line, but ultimately physically he has to be able to deliver. Fingers crossed with his rehab."
"The window eventually closes for everyone. We have some announcements early next week.
"We want those players that are leaving the club who have given great service to go out with a lot of respect and a lot of dignity. They'll always be great Saints players for us."
While the club prepares to bid farewell to some of its veterans, it will blood its ninth debutant this week, with Cameron Shenton to play his first game.
Added to that, the coach is tinkering with the idea of giving fifth gamer Tom Curren the tagging role on Gary Ablett.
"He's such a great player, look we might throw the role to a young Tom Curren," Watters said.
"He's played on Mitchell, he's played on Hannebery. He's learning a hell of a lot about the game, so there's that learning opportunity that could be there as well."
Twitter: @JacquiReedAFL
Lenny Hayes has been encouraged to lace up the boots again in 2014. Picture: AFL Media
