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Right-click the TITLEBAR and choose "Image Size...".

Enter the new pixel value at the top, and click OK.

Be forewarned though that going from 300px down to 16 will most likely NOT leave you with a decent rendering of the original image. It "might" if the image were done in a Vector app... but not from PS. Not unless the image is very simple looking.

Do you have the plugin for PS (free) that allows one to save out an image as a Windows icon file? That's what you'll need unless you have another program for that.

Is this by any chance an icon for your Website that will show up when people bookmark it? Because that's one of the few places left whereby 16x16px is a common size.