I think I have cracked it! Neat and well- fitting sleeve heads are an ongoing fascination for me and I have researched and studied them extensively! this is a method I swear by and it is a pleasure to share this with you. Do try it at home!
The pattern I used for this Henley constructs the garment bottom up, that is the body and the sleeves. Well, I hate bottom up sleeves for more than one reason. Firstly, I find sewing fitted sleeve caps into the body tedious. Secondly, it is a pain to adjust the sleeve length.
I looked at the pattern and it said that 14 sts is the final amount to be cast off at the sleeve head (remember: 14).
So I picked up with a slightly smaller needle the sleeve head stitches around the armhole. I started picking up stitches at the bottom of the armhole in the section AFTER the armhole shaping. The armhole was shaped binding off on the body 1 x 4 sts, 1 x 3 sts, 2 x 2 sts, 2 x 1 st. So I started picking up on the straight section and I picked up 1 st every 2 rows.
Why? Because when I knit the sleeve head with short rows, I add ONE stitch every two rows on each side on the sleeve head!
When I got to the top of the sleeve head (after picking up 20 sts), I put a maker in the work, picked up 14 sts 2 sts for each 3 rows. After my 14 sts I put another marker in the work and picked up 20 sts (one st n every 2 nd row) and I cut the yarn.
Why 2 sts to every 3 rows? Because that is where the ‘fabric’ is flat, stitches are joined to rows, just like on a button band…
I then moved the sts. I slipped 20 sts so my needles were ready to start knitting the sleeve head, the first 14 sts.
With a second dp needle (correct for my gauge), I knitted the first 14 sts, put a short piece of wool for the short rows to mark the turn, turned the work, knitted back 14 sts AND an extra stitch from the holding needle AND I put a marker thread as I turned the work.
Then I knitted the right side again, this time picking up an extra st from the holding needle, which I knitted together with the loop from the marker thread. Before turning the work, I re-positioned the marker thread.
I knitted all stitches back and when I came to the end, I picked up a stitch from the holding needle, positioned the loop from the marker thread to the left of it, pulled them together, re- positioned the marker thread, turned the work and so on… Until all 20 sts on both sides were used up.
Then I added the bound off stitches and incorporated them into the short rows, so I added on the sleeve head what I had bound off for the armhole.
Voila! This sleeve head is definitely fitting neatly into the armhole! Yay!
PS: In row 3, I re- introduced the basket weave pattern…
textileshed 
Super handy. Thanks for writing this up!