Open Environment Variables
From Server 2008 open the Advanced System Properties Control Panel – either by right-clicking My Computer and going to Properties then Advanced System Properties or by going to the System Control Panel and click Advanced System Properties.
From the Advanced System Properties Window go to Environmental Variables. From Environment Variables in System Variables go to Path and click Edit….
From the Exit System Variable Window, scroll to the end of Variable value:
Enter the exact text below, ensure that there are no spaces at the beginning or end of the statement.
;C:Progra~1Common~1Micros~1webser~114bin
Click OK a few time to return to the desktop and reopen your Command Prompt, you should be able to use Stsadm and Psconfig without having to first navigate to SharePoint Root (formerly the 12 Hive) any longer.