Error "Nintex.Workflow.NWException: Failed to set permissions (-2130575276) ... The user does not exist or is not unique"

ISSUE

When running a workflow, it fails on the "Set Item Permissions" action and the following error is logged on the workflow history page:
Additionally, the SharePoint ULS logs contain the corresponding error related to the above error.

RESOLUTION

Use the Account Name instead of display name when specifying the user or group for the "Set Item Permissions" action.